Planning for a loved one with special needs is complicated. We regularly guide clients through the process. Guardianship, public benefits and services, special education, and living arrangements are just some of the issues that you face if your child has special needs. Providing for your child’s financial future may seem impossible. Even if your special needs beneficiary qualifies for every possible government program, he or she may not be able to afford the quality of life that you desire. But leaving assets to your child outright could result in the loss of benefits and make the situation worse. Leaving money outright to a beneficiary receiving needs-based government benefits is essentially a bequest to the government. Unfortunately, we regularly see parents disinherit their special needs child – often with instructions to the beneficiary to “take care of” the disinherited person. This can result in the special needs child receiving little or nothing from you, or being disqualified from benefits.
A properly drafted and administered Special Needs Trust will enable the disabled person to maintain eligibility for public benefits and also receive the benefit of the funds placed in trust. The assets in the trust can be used to provide a higher quality of life for the trust beneficiary. It is important to understand that the Special Needs Trust must be designed specifically to supplement, not replace public benefits. These trusts can be included in your estate plan or they can be created now so that money can be given for your child’s benefit before your death. When your money is used to fund a Special Needs Trust, the trust is completely protected from the government.
A different type of Special Needs Trust is used when a disabled individual’s own assets are used to fund the trust. When the disabled person’s money is used to fund the trust, any assets remaining at his or her death must first be used to pay back the State for the amount of any public assistance benefits the beneficiary received during life. This type of trust is often used when a disabled individual is awarded a settlement from a personal injury case or receives an inheritance.
If you or your loved one are in need of special needs planning, we can help you evaluate the alternatives and help you plan appropriately for the future.
