As the parent of a special needs child, it is common to end up worrying about what will happen to the child if you die or become incapacitated. You understandably want to do whatever you can to make sure that the child’s future remains stable in case something happens to you.
This article reviews some of the critical estate planning issues you should take into consideration when it comes to children with special needs.
Determine Your Purpose for Estate Planning
Special needs planning is unique because it must take any public benefits that the child receives into consideration. This planning can be utilized for several reasons including helping the child manage money throughout the child’s lifetime, protecting the child so he or she remains eligible for public benefits, and ensuring that funds are preserved in case public funding ever stops or becomes restricted.
Utilize the Best Planning Method Available
There are several estate planning strategies that families can utilize to achieve their goals for special needs children. Some of these strategies include:
- Disinheriting the child so they can continue to receive special needs benefits. Alone, this rarely helps achieve estate planning goals.
- Granting your estate to the brothers and sisters of the special needs child. While this might result in your other offspring taking care of the special needs child, this also comes with certain risks including that your other children might fail to live up to this goal.
- Leaving an inheritance to the disabled child. Doing this will likely impact the child’s ability to receive publicly-funded benefits. In the worst cases, the child will be ineligible for Medicaid and Supplemental Security Income as a result of this inheritance
- Placing inheritance in a special needs trust. This option is utilized by most families to ensure that the special needs child sees the best possible outcome. These trusts work because assets are not available to the child but instead are owned by the trust subject to disbursements under strict requirements.
Decide Whether to Transfer Assets While Alive or at Death
A parent can create a special needs trust at the time of death, but many parents end up deciding to utilize “living” trusts while the parent is still alive.
Some of the reasons why parents create living trusts include avoiding probate, which can be costly and take time, allowing other family members and loved ones to make contributions, and creating an opportunity for a co-trustee to gain experience in trust administration. What option works best, however, depends on each parent’s unique situation.
Speak with an Experienced Estate Planning Attorney
There are various methods to plan for the future of a child with special needs. If you need assistance navigating this process, an experienced estate planning attorney can help substantially. Contact attorney Jim A Lyon today to schedule a free case evaluation.