How should I protect my special needs child in my estate plan?
Sadly, there will always be some children with special needs, whether they are born with congenital defects or develop disabilities through accident or disease. The astonishing increase in the number of cases of autism, the Zika virus, with its potential for the catastrophic congenital defect of microcephaly, and the discovery of lead in the water of Flint, Michigan have combined to make the general population particularly uneasy about the possibility that one day some member of their own family will have special needs. While distressing to consider, it is a reality for a growing percentage of families. Families of moderate means, as well as those who have substantial estates, should consult with reputable estate planning attorneys to protect the future of their special needs children.
How is estate planning altered when there is a special needs child in the picture?
In most cases involving a special needs child, it is useful, often essential, to create a special-needs trust, also referred to as a supplemental-needs trust. Such a document is created to provide ongoing care and financial support for the special needs individual throughout his or her lifetime.
Why is the trust necessary?
One thorny problem parents of special needs children have is that if they pass their assets on directly to their disabled child they risk jeopardizing the child's (later the adult's) eligibility for any means-tested government benefits ( i.e. Medicaid, Medicare, and Supplemental Security Income).
As most of us know, the government tends to tremendously underestimate the cost of living (for example, a family of 4 that is receiving Welfare can expect up to $900 per month). According to the same strange process of calculation, a disabled individual with as little as $2,000 in available assets may be considered too affluent to be eligible for public benefits.
Fortunately, there is a way around this dilemma for people planning their distribution of assets. When assets are held in special-needs trusts, and managed by assigned trustees, those assets aren't considered by government agencies during calculations for public benefits. Thus, it is possible to leave your special needs adult child a sizable portion of your estate without threatening his or her regular public benefit income.
What can my adult child use funds in the trust for?
Your special needs child can use monies in the trust fund to pay for the many aspects of her or his life that government benefits don't cover. Depending upon what type of government stipend your child is receiving, these may include:
- Dental work
- Eyeglasses
- Haircuts
- Caregiver fees
- Recreational activities
- Family visits
- Educational or enrichment programs
In general, the trust fund you leave for your special needs child will provide a much improved quality of life.
The Importance of Using a Skilled Estate Planning Attorney to Craft the Trust
The special needs trust, like any other legal document, is only as good as it is durable. Unless it is well-crafted, there may be disastrous consequences for the very person you are trying hardest to protect. It is extremely important that the phraseology of the document ensures that the money isn't given directly to the disabled individual. Unless this is done, the beneficiary may lose his or her benefits and suffer instead of thrive.
Other important considerations are: who the trustee will be, what living arrangements will be necessary when both parents are deceased, and whether both the trustee and the child will likely be compliant with the parents' wishes. It is also important to remember that all involved family members be notified about the estate planning decisions being made in order to prevent discord later on, and that other family members who may leave the child an inheritance be informed about the importance of creating a trust.
Because there are many financial and personal decisions to be made in planning for the future of a special needs child, it is crucial to have the assistance of an experienced estate planning attorney with a detailed knowledge of current law as well as a sense of compassion for all involved parties.