Estate planning when you have a child with special needs is a little more difficult than estate planning for most parents. You are going to have to carefully consider your child’s needs in a way that many parents do not need to.
You won’t just have to consider naming a guardian in the event that you die while your child is still a minor. You will have to consider whether they will need the help of a guardian as adults and factor in their need for financial and social support in the long term.
For many parents, creating a special needs trust is the most straightforward way to provide for their child’s needs both in the event of a parent’s early death and when they reach adulthood.
A special needs trust lets you set aside resources for someone dependent on you
Although many parents continue to incur costs after the child turns the age of 18, the family will likely eventually stop supporting that child as they reach an age where they are able to secure gainful employment.
The same is probably not true for a child with special needs. While they may be able to work, they may not be able to command a wage that will allow them to live truly independently in the future. Creating and funding a special needs trust will ensure that there are financial resources to close the gap between what your child can earn and what they need to provide for themselves.
Special needs trusts ensure that someone else monitors spending
Giving any young adults access to substantial financial resources could result in questionable decision-making, but even older adults with special needs could easily waste assets intended to support them for life in just a few months.
Creating a special needs trust allows you to name a trustee, if not multiple trustees, who will oversee the assets that funded the trust and ensure that what resources get withdrawn from the trust go to appropriate and reasonable use. For example, a trustee can help ensure that funds go to cover housing, educational and medical costs rather than entertainment costs.
Special needs trusts can help your loved one qualify for state benefits
A large inheritance could easily prevent your child with special needs from receiving Medicaid or other state benefits that they depend on. Placing assets in a trust instead of allowing for direct inheritance will mean that your child still has access to resources when they need them, although you can place limits on that access to ensure that they never exceed the threshold that would prevent them from receiving Medicaid or other benefits.
Structuring and funding a special needs trust may be complex, but it has many benefits for you as a concerned parent and your child who depends on you.