Planning for the future takes on a heightened importance if you are the parent of a child with special needs. As a parent, you undoubtedly want to provide for your child, both while you are here and after you are gone. Careful planning is required, however, to accomplish this goal when your child has special needs to ensure your child’s continued eligibility for state and federal assistance programs. The key to ensuring that your child will benefit from both your assets and the assistance of programs such as Medi-Cal and Supplemental Security Insurance (SSI) is to incorporate special needs planning into your overall estate plan. For most parents who have a child with special needs, a special needs trust is an integral part of their special needs planning component.
The Financial Reality of Raising a Child with Special Needs
As a parent, you undoubtedly do not want to think of your child in terms of how much it costs to support and maintain your child. The reality though is that the average cost of raising any child is high. As the parent of a child with special needs, you must realize that the cost of raising your child will likely be significantly higher than average. For example, you may incur ongoing expenses for things such as specialized equipment, prescription medication, and surgeries as well as therapists, doctor visits, and caregivers.
Moreover, the odds are good that your child will continue to require specialized care as an adult — and that care will continue to be expensive. Although your legal obligation to support your child may end when he/she reaches the age of majority, your desire to continue to contribute to your child’s care and maintenance won’t stop. While your child may qualify for assistance from various state and/or federal assistance programs, such as Supplemental Security Income (SSI), Supplemental Nutritional Assistance Program (SNAP – food stamps), Medi-Cal, or Section 8 housing, you will probably want to supplement that assistance to ensure that your child’s quality of life is the best possible.
How Can Special Needs Planning Help?
Incorporating special needs planning strategies and tools into your overall estate plan allows you to plan ahead to ensure your child is well cared for both while you are alive and after you are gone. The desire to provide continued financial support to your adult child with special needs is understandable. As a general rule, providing financially for an adult child and/or gifting assets to an adult child does not present a problem; however, in the case of a child with special needs, doing either can actually cause more harm than good. If your child depends on assistance from programs such as SSI, Food Stamps, or Medicaid, gifting anything of value to your child could threaten his/her eligibility for benefits from these programs. Many assistance programs have both an income and an asset test that applicants/recipients must pass to gain or retain eligibility. Consequently, an applicant/recipient cannot earn a significant income nor own valuable assets or benefits could be lost. Gifting anything to your child, therefore, could cause your child to lose eligibility for much-needed assistance programs. It is this dilemma that highlights the increased need to include a separate special needs planning in your comprehensive estate plan.
What Is a Special Needs Trust?
One of the most commonly used tools within a special needs planning component is a “Special Needs Trust.” A special needs trust, also referred to as a “supplemental” needs trust, or just shortened to an “SNT,” is a specialized irrevocable living trust that allows you to continue to provide for your child without jeopardizing his/her eligibility for assistance. For a trust to be recognized as an SNT by SSI, Medicaid, or other assistance programs, very specific language must be used and the trust must be drafted properly, which is one of the many reasons it is in your best interest to have a special needs planning lawyer assist you. Once created, you can transfer assets into the trust to be used to supplement the care provided to your child by programs such as SSI and Medi-Cal. In addition, other family members can contribute to the trust and the trust may continue to provide supplemental care for your child long after you are gone without creating problems with other benefits your child receives.
Contact Us for Special Needs Planning Attorneys
Please download our FREE estate planning checklist. If you have additional questions or concerns regarding special needs planning, contact us at the Northern California Center for Estate Planning & Elder Law today by calling (916)-437-3500 or by filling out our online contact form.