If you are the parent of a child with special needs you undoubtedly worry about your child’s future just like any other parent. You may not worry more than other parents; however, you may have more to worry about as the parent of a child with special needs. Will your child be able to live independently as an adult? Will your child need ongoing assistance as an adult? Who will help your child is something happens to you? Most importantly, how can you ensure that your child has sufficient financial resources to live comfortably when you are gone? How will the inheritance you leave behind be used to care for your child? Special needs planning is the answer to many of these questions.
The Cost of Raising a Child with Special Needs
As a parent, you likely try not to think too hard about the actual costs involved in raising your child; however, given the expenses that often come with raising a child with special needs. We all know that raising a child is not cheap; however, no parent wants to put a price tag on their child. As the parent of a child with special needs, you are likely no different. At the same time, you probably recognize the fact that raising a child with special needs does usually come with additional expenses, some of which can be very high. Depending on your child’s functional level and abilities, you may have extra expenses for physicians, surgeries, and various types of therapy along with hospital stays, medical equipment, and home health aids. You also know that many of these expenses will continue after your child becomes a legal adult. You have always been financial able to ensure that your child have everything he/she needs; however, how can you do that after you are gone?
Your Child’s Inheritance and Eligibility for Assistance
As you likely already know, there are a number of government assistance programs that can help with the financial aspect of caring for a child with special needs. Supplemental Security Income (SSI), for example, can provide monthly monetary assistance while Medicaid can help cover the healthcare expenses. These programs can continue to provide assistance to your child after he/she reaches adulthood as well; however, your child must be independently eligible for assistance once your child becomes a legal adult. Programs such as SSI and Medicaid are considered “needs based” programs, meaning they are intended to help low income individuals and families. As such, participants must meet program income and asset guidelines to become, or remain, eligible. An inheritance could jeopardize your child’s continued eligibility because of those income and asset limits. While your child is a minor, your child cannot legally own anything; however, once your child becomes a legal adult, assets gifted to your child will become part of his/her estate. Therefore, the inheritance you leave behind for your child will be taken into consideration when determining eligibility for SSI, Medicaid, and other needs based government assistance programs. Your well-meaning desire to provide financial support for your child when you are gone may actually end up jeopardizing your child’s eligibility for much needed assistance unless you plan ahead and include special needs planning in your overall estate plan.
Using a Special Needs Trust to Protect Your Child’s Inheritance
State and federal assistance programs are usually able to cover basic living expenses for an adult with special needs; however, as a parent you want your adult child to have supplemental funds to be used on the “extras” we all have. How can you leave your child an inheritance, however, without also disqualifying your child for government assistance? The answer is often found in a special needs trust. Also referred to as a “supplemental needs trust, a special needs trust operates in essentially the same way as any other trust with your child being the named beneficiary. The primary difference is that very specific language must be included in the special needs trust agreement to ensure that the various government assistance programs recognize the trust as what it is intended to be — a special needs trust. As long as the trust is recognized as a special needs trust though, any assets held in the trust for your child’s benefit will not be counted against your child for the purpose of determining eligibility for assistance programs. The funds held in the trust can then be used to pay for things such as vacations, transportation, and numerous other things your special needs child may need without fear that they will disqualify your child for other assistance.
For more information, please download our FREE estate planning worksheet. If you have additional questions or concerns regarding special needs planning, contact the experienced Massachusetts estate planning attorneys at DeBruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.