Families who have a family member with a disability must plan for the future very carefully. How assets are left after your death can have a tremendous impact on the quality of life for that person. In the past, a Will may have been enough, but times have changed. To protect a person with special needs, a well-defined estate plan is vital.
If you have not yet created an estate plan, doing so could be one of the most important actions you can take on behalf of your children’s future well being. A properly drafted estate plan designates who will care for your minor children upon your death, as well as providing for the smooth transfer of wealth to your children. Many parents assume that making sure a child is financially secure after they are gone means leaving the assets outright to the children. For many reasons, such as a child’s inability to manage finances, the outright distribution of your assets to your children may not be the most prudent option. This becomes especially true if any of the beneficiaries of your trust estate have, or develop in the future, special needs, and require the assistance of government aid.
Know Your Options
Leaving assets outright to a special needs child could render them ineligible to receive otherwise valuable government assistance until those assets are exhausted. But what is a parent to do to avoid this result?
One option is to disinherit the special needs child completely, thereby allowing the child to receive aid from the government they would otherwise not be able to receive with an inheritance. Although the parents could instruct their other children to care for the special needs child, there is no guarantee that this will be done. Additionally, there is no assurance that the government program will continue in existence or will provide the expected level of assistance. Finally, and possibly most significantly, the psychological effects of disinheriting the child could be devastating to the child and the parents during their lifetimes. Therefore, for most parents, this option is not an option at all.
A second and more viable option for fulfilling a parent’s desire to care for a special needs child without interfering with his or her ability to receive government assistance is through the use of a properly drafted Revocable Living Trust (RLT). Special provisions can be included in your RLT limiting the child’s access to the trust assets and, hence, the inheritance’s effects upon assistance eligibility.
How a Special Needs Trust Works
A Special Needs Trust allows a parent, grandparent, or guardian to provide funds for a child with a disability without disrupting the child’s eligibility for government aid. Setting one up is a fairly simple process. Important points to remember while investigating the use of this estate planning tool are:
- Decide on an appropriate guardian for your child
- Determine who would be a suitable Trustee(s) to manage the Trust’s assets and supervise your child’s finances
- Outline instructions for your child’s education, housing, personal and emotional needs
Our law firm helps families address the financial, legal, and social aspects of a person’s life to develop an effective plan for the future. Our goal is to ensure that their needs are met and that they have the opportunity to expand their horizons and follow their dreams.
