If you are the parent of a child with special needs, you understand the joy these children bring to a family as well as to everyone with whom they interact. You are also likely familiar with the worry and fear that comes with thoughts of your child’s future. Fortunately, many children with special needs now live very independent lives; however, as a parent you may still wish to ensure that your child has your financial support as an adult, even after you are no longer here to provide it in person. Doing so, however can be tricky. Lets explore why it is important to incorporate a special needs planning component in your estate plan.
Raising a Child with Special Needs Is Expensive
As a parent you prefer not to think of parenthood in terms of how much it costs to support and maintain your child; however, the reality is that children are not cheap. If you are the parent of a child with special needs, 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
- Therapists (occupational, physical, speech etc.)
- Doctor visits
If your child has special needs, the odds are good that he/she 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 will likely continue.
Gifting to a Beneficiary with Special Needs
The desire to provide continued financial support to your adult child with special needs is both understandable and admirable. 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.
Can a Special Needs Trust Help?
A special needs trust, also referred to as a “supplemental” needs trust, 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 a special needs trust 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 Fargo 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 Medicaid. 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.
Please download our FREE estate planning checklist. If you have additional questions or concerns about special needs planning, contact us at the Northern California Center for Estate Planning & Elder Lawby calling (916)-437-3500 or by filling out our online contact form.