4 Key Estate Planning Tools for ASD Parents

Ensuring future security for special needs children after parental loss.

UNSPLASH PARENT LOSS

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Long-term financial planning is crucial for families of children with autism spectrum disorder. The unique vulnerabilities and circumstances of ASD children require parents to plan ahead and ensure that children will continue to receive the support and care they require should anything happen.

Parents in Hong Kong have access to these principal financial planning tools for children with special needs: guardianship, a will, an enduring power of attorney, a private trust, and the government's Special Needs Trust (SNT). 

What is best for your family depends on your individual circumstances and the specific needs of your child, and it’s important to have a good understanding of the benefits and limitations of each tool.

Estate planning tool #1: Guardianship 

If a trusted individual is willing to care for your child in your absence, guardianship might be a worthwhile option. In Hong Kong, the Guardianship Board appoints guardians to manage both the health and finances of a mentally incapacitated person (MIP) who is over 18 years old. Under this definition, individuals with autism may qualify as MIPs.

Guardianship creates a legal relationship in which the appointed guardian is authorized and obligated to make significant decisions on behalf of your autistic child, including those related to medical care and living arrangements. This can be particularly beneficial if you don’t have another adult child or relative to assume this responsibility once you and your spouse pass. However, the drawback of guardianship is the financial authority limit imposed on the guardian; they can manage no more than HK$20,000 per month of the dependent's funds, as this is the maximum jurisdiction of the Guardianship Board. With escalating living costs, this limitation could create future challenges.

Estate planning tool #2: Enduring Power of Attorney 

A more flexible alternative is the enduring power of attorney (EPA), a legal instrument that is relatively obscure in Hong Kong. A University of Hong Kong survey from 2017 revealed that over 80 percent of survey participants were unaware of the EPA.

The principle behind an EPA is straightforward. While you are mentally competent, you can designate an attorney to manage your assets for your child's care in the event of your mental decline. Unlike guardianship, there's no cap on the assets the attorney can manage. Without an EPA, accessing an incapacitated person's finances typically requires a court order, a process that can be both protracted and expensive.

If you have appointed an attorney through a valid EPA, they will be authorized to manage your assets for you if you’re mentally incapacitated, providing financial security for your child at any age.

However, while an EPA is efficient and cost-effective, it grants the attorney power over only financial matters and property management but not over other critical decisions such as your child's housing or healthcare. Additionally, its effectiveness is limited to the lifetime of the child's parents; the attorney's legal authority ends upon the death of a child’s parents.

According to Deirdre Fu, a partner and private client specialist at law firm Withersworldwide, an EPA is usually created alongside a will:

When we draft a will for a client, we may advise them to also create an EPA so that there’s an arrangement in place in case they become mentally incapacitated and before they pass away. More and more people in Hong Kong are going for this option as we have one of the longest life expectancies in the world.

Estate planning tool #3: Will

Dying intestate, or without a will, means your assets will be distributed according to the intestacy rules, which typically allocate half to the surviving spouse and divide the other half equally among surviving children. By proactively creating a will, you have the power to specify exactly how your assets will be distributed to your special needs child upon your passing. However, it's important to consider that your child might not have the capacity to manage the inherited assets effectively.

Estate planning tool #4: Trusts

Deirdre recommends that, if financial circumstances allow, parents of children with autism should consider establishing a trust in addition to creating an EPA and a will. “With all three in place, an autistic child will be taken care of and continue to have financial support without interruption after their parents die,” she notes.

There are two types of trusts to consider. A private trust offers a customized arrangement catering to your child's unique needs. However, it is cost-intensive and generally requires a substantial capital investment of millions and high annual maintenance fees.

Alternatively, the government's Special Needs Trust (SNT), established in 2018, provides an accessible alternative tailored for individuals with special needs, including those with autism. As a parent, you can outline a financial plan for your child and appoint a caretaker to oversee your child's finances after your passing. The SNT has a lower capital threshold for entry, set at approximately HK$260,000. However, it’s important to note that the trust discontinues if the beneficiary relocates permanently away from Hong Kong. 

Click here to access our feature on Hong Kong's Special Needs Trust.

Planning for a child with special needs is a complicated task, but it’s possible to secure a fulfilling and comfortable future for your child even after you pass, and the most effective way to prepare for tomorrow is to give your best effort today.