Families who include children with special needs face unique challenges and opportunities to protect their children’s futures. Providing appropriate medical, educational, recreational, and employment opportunities for your child with special needs can result in a lifetime of pursuing public and private programs and services. Too often, parents or people responsible for financial and medical management of children with special needs receive misguided advice to disinherit them.
Who Qualifies as Special Needs?
The term “special needs” refers to the clinical and functional development of individuals requiring assistance for medical, psychological, or mental disabilities. For government benefits programs, special needs are a part of the larger category of disability. Special needs diagnoses are considered disabilities, but not all disabilities are special needs. Maintaining your child’s qualification for government disability benefits can be accomplished with estate planning strategies. You do not need to disinherit your child with special needs to preserve their benefits.
How Does Inheritance Affect Government Benefits?
Directing assets to the person with special needs can result in their inheritable assets and income levels exceeding allowable levels, making them ineligible for public assistance. This problem can make parents decide not to provide the same level of inheritance as they would for other children. However, other methods exist to provide inheritance and protect government benefits with careful planning.
Estate Planning Solutions
The proper creation of a special needs or supplemental needs trust can benefit the child without jeopardizing eligibility requirements for government disability benefits. Public benefits have specific spending designations that cover shelter, food, clothing, and transportation. The monies from a special needs trust are designed to improve the child’s overall quality of life but are spendable only in certain categories.
The trust money can’t be used for housing, food expenditures, or other financial needs that government benefits meet. Instead, it is used to pay caretakers, out-of-pocket medical expenses, some transportation, educational expenses, recreation, vacations, and more. An experienced estate planning attorney can design your special needs trust to comply with the specific rules of the beneficiary’s public benefits program.
How Does the Trust Work?
Often, parents choose to be the trustee(s) of the special needs trust until they become incapacitated or pass away. An alternate or backup trustee with expertise in managing trusts who can pay bills and taxes, keep accounts, and make sound investments is crucial to designate. The parents may also choose to designate a professional trustee for the same purpose.
Parents and other decision-making individuals using a special needs trust have the means to treat their special needs child similarly to other children. While different types of trusts are unique to protect government disability benefits, the child will be able to inherit as a trust beneficiary. Once the special needs trust has served its purpose, any remaining assets can be divided among surviving family members or fund the organizations instrumental in the child with special needs’ care. If you prefer, you can designate a charity to receive the remaining principle as a form of legacy gift, perpetuating your child’s memory.
Just as a supplemental needs trust can be created and utilized by a parent of a child with special need, it can also be implemented by a family member for a niece, nephew, etc.
An estate planning attorney with experience in this realm knows how to create this trust to meet your child’s needs and financial goals while protecting your child’s government benefits. At DiPietro Law we want families to understand there is no need to disinherit your special needs child- we are able to craft a plan that is tailored to the needs of every member of your family.