For the parent of a child with special needs comprehensive estate planning takes on a heightened importance. Every parent worries about providing for their child in the event something were to happen to the parent; however, if you are the parent of a child with special needs you may feel a more urgent need to plan for that possibility as well as to plan for the day when the child reaches adulthood. Your child likely depends, to some extent, on state and federal programs to help cover the cost of medical care. When your child reaches adulthood, he or she may also rely on assistance programs to cover housing, food, medical, and daily living costs. Naturally, you want to help with those expenses, both now and after you are gone; however, doing so could have unintended consequences if your contributions result in your child losing eligibility for the assistance programs on which he/she depends. The good news is that special needs planning within your comprehensive estate plan can help. By creating a special needs trust as part of that planning you can protect your child’s benefits while still being able to contribute yourself to your child’s care, both now and in the future.
The Cost of Care for a Child with Special Needs
As the parent of a child with special needs you already know that your child brings unparalleled joy and love to the family. The reality, however, is that your child may also bring substantial healthcare bills that will likely remain a reality into adulthood. Depending on the type and severity of your child’s special needs, these expenses could include:
- Prescription drugs
- Medical equipment
- Home health aids
- Frequent hospital stays
As a parent, you don’t want to worry about the expenses – all you care about it that your child is well cared for, both now and in the future. The reality, however, is that the cost of caring for a child or adult with special needs is something that must be addressed. Fortunately, there are state and federal assistance programs, such as Medicaid and Supplemental Security Income (SSI), that can help with the cost of care; however, eligibility for these much needed programs is determined, in part, by an applicant’s income and assets. This can create a problem if you, or other well-meaning family members, try to help financially with your child’s care. Once your special needs child reaches the age of majority (18) any assets held in his/her name could prevent your child from qualifying for assistance from programs such as Medicaid or SSI. For this reason, simply gifting assets to your child will not work. The answer may be a special needs trust.
What Is a Special Needs Trust?
Also referred to as a “special needs trust”, a supplemental needs trust is a specialized trust that can be used to provide “supplemental” care to a special needs individual above and beyond the care provided by state and federal assistance programs. A special needs, or supplemental needs, trust operates in much the same way as any other trust; however, very precise language must be used in the creation of the trust for the federal government to recognize the trust as a supplemental needs trust. For this reason, consultation with your experienced estate planning attorney is essential before creating your trust.
How Can A Special Needs Trust Help?
When a supplemental needs trust works as intended it provides funds that can be used to pay for things such as vacations, transportation, and numerous other things your special needs child may need. There are also certain things a special needs trust cannot be used to pay for though, making it even more important to understand the rules regarding a special needs trust if you intent to create one. Once the trust is in place it can be used by anyone who wishes to contribute to your child’s care. It is imperative though, that you explain to all well-meaning family members that any testamentary gifts intended for your child should be directed into the trust, not gifted directly to your child, to ensure that the gifts do not jeopardize ongoing eligibility for assistance programs.
For additional information, please download our fee report “A Special Child Needs Special Planning.” If you have additional questions or concerns regarding Medicaid planning, or would like to get started with your plan, contact the experienced New Hampshire estate planning attorneys at Debruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.