Every parent worries about providing for their child in the event they are suddenly taken away from the child. The parent of a child with special needs, however, typically feels a more urgent need to plan for that possibility. In addition, as the parent of a child with special needs you are undoubtedly planning for the day when your child reaches adulthood. You already know that the costs involved in caring for your child can be high. Fortunately, there are numerous state and federal assistance programs that provide financial and other assistance to special needs individuals to help defray those costs. If you plan to supplement the assistance provided by these programs when your child is an adult though, you must take great care in how you provide that assistance to avoid jeopardizing your child’s eligibility for assistance. One answer is to create a special needs trust that allows you to continue helping your child without the risk of jeopardizing eligibility for much needed assistance.
The Costs Involved in Caring for a Child with Special Needs
As the parent, you don’t want to worry about the costs involved in caring for your child; however, the reality is that you may incur substantial healthcare bills that will likely always be part of the child’s life. Depending on the type and severity of the child’s special needs, these expenses could include:
- Prescription drugs
- Medical equipment
- Home health aids
- Frequent hospital stays
Once your child reaches the legal age of majority, managing his/her care may become even more complicated. If you wish to continue to be able to contribute to the cost of that care you need to plan ahead.
The Problem –Jeopardizing Eligibility
The good news is that with advances in medicine and technology, many children with special needs grow up to live fairly independent and amazingly happy lives. Depending on your child’s specific disability, he or she may be able to work and even live alone with minimum assistance. Financially, however, your child may always need help. Fortunately, state and federal assistance programs will likely continue to offer that help even after your child reaches adulthood; however, you may wish to supplement that assistance to ensure that your child is comfortable and secure. Likewise, you will want to make sure your estate plan provides for your child after you are gone.
The problem is that once your child becomes a legal adult, assets you gift to your child will be counted when determining eligibility for programs such as Medicaid and SSI. Your well intentioned gift (or that of a grandparent or other loved one) could result in the loss of eligibility for these much needed assistance programs.
The Solution – Creating a Special Need Trust
The good news in all of this is that there is a solution – a special needs trust, also referred to as a supplemental needs trust. A special needs trust is a special type of trust that allows you to provide for your child without the risk of losing eligibility for assistance programs. A special needs trust operates essentially the same as any other trust in that you need to appoint a Trustee for the trust and transfer assets into the trust to fund it. The difference is that those assets can only be used to “supplement” the assistance the trust beneficiary (your child) receives from assistance programs. Assets can be used for specific things such as vacations, home furnishings, a vehicle, recreation, and even a personal care attendant.
For a trust to be recognized as, and treated as, a special needs trust for purposes of eligibility for assistance programs the trust must be drafted using very specific language. As long as the trust is properly drafted, however, your child will be able to benefit from the trust assets without losing any existing benefits. This way, you are able to continue to help support your child financially without risking your child’s eligibility for much needed assistance programs.
For more information, please download our free report “A special Child Needs Special Planning.” If you have additional questions or concerns regarding the creation of a special needs trust, contact the experienced New Hampshire elder law attorneys at Debruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.