Planning for a Special Needs Child
Parents and Guardians of children with disabilities face daily challenges the rest of us cannot even imagine. Caring for such a child is demanding physically, mentally and financially. One of the biggest issues facing these parents is the fear of dying before their child. Who will provide for the child and with what resources and guidance?
All parents should make legal and financial provisions for their children, but for parents of a special needs child, planning ahead is even more important since the child may never reach a stage of independence.
The key to proper estate planning for a special needs child is two-fold:
- To ensure the child qualifies and REMAINS qualified for government benefits.
- To protect the family’s assets from spend down or seizure for reimbursement for Medicaid or SSI Benefits.
Without proper, pro-active planning, in most states, the child may inherit property only to be disqualified from receiving government benefits. The government may also claim reimbursement from that inheritance for benefits that were provided before the parents’ death.
The most helpful option for families needing to make provisions for a special needs child is a Special Needs Trust or Supplemental Needs Trust. This type of trust can be used to help pay for extras, often without affecting eligibility for government benefits. These trusts can be set up now with the parents acting as trustees to oversee the management on their child’s behalf.
Normally there is not a limit on how much money can be put into the trust for the benefit of a special needs child. However, in order to protect the child’s ability to receive SSI and Medicaid, the Trustee must be instructed to pay only extras, like day care, transportation, or therapy and NOT for the essentials such as clothes, food or housing. The trust can also accept any inheritance that the child may receive.
Parents can name successor trustees to handle the finances of the trust after their death. This ensures that the child will continue to receive needed assistance. A Special Needs Trust can be an excellent tool to provide instructions and care for a disabled child or adult beyond governmental benefits. For more information on a Special Needs Trust, call our office to discuss specifics on your situation.