For the parent of a child with special needs, comprehensive estate planning takes on a heightened importance. It is natural to worry about providing for your child if something were to happen to you. As the parent of a special needs child, wondering about what adulthood will look like for your child is also a concern. The bottom line is; special needs children need special attention. Thus, the sense of urgency to provide a plan for a special needs child is often heightened.
If you have a child with special needs it is likely that your child depends, to varying extents, on state and federal programs. These generally help cover the costs of medical care. As an adult, your child 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. Your contributions could result in your child losing eligibility for the assistance programs on which he/she depends. Fortunately, there is a solution for this dilemma – creating a special needs trust. This can become a key special needs planning component within your overall estate plan.
Parenting a Child with Special Needs
A child with special needs often brings unparalleled joy and love to the family. Sadly, substantial healthcare bills can weigh and strain on that joy. Unfair as it might seem, these costs will likely always be part of the child’s life. Depending on the severity and variety of the child’s special needs, these expenses might include:
- Prescription drugs
- Surgeries
- Medical equipment
- Therapy
- Home health aids
- Frequent hospital stays
As a parent, all you want is for your child to be well cared for, no matter what. Part of this must include handling the costs involved in providing that care, both now and in the future.
The Problem – Jeopardizing Eligibility
Many modern-day children with special needs grow up to live fairly independent lives. Advances in science and medicine, as well as shifts in societal attitudes have made this more possible. Depending on your child’s specific disability, he or she may be able to work and even live alone with minimum assistance. Despite all this, realistically, your child may always need financial assistance.
Fortunately, state and federal assistance programs will likely continue to offer aid 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 – A Special Need Trust
The good news in all of this is a special needs trust, also referred to as a supplemental needs trust, can be a possible a solution. 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.
First, you’ll need to appoint a Trustee for the trust. You will also need to transfer assets into the trust to fund it. Those assets are only used to “supplement” the aid your trust beneficiary (aka your child) receives from assistance programs. Specific things such as vacations, home furnishings, a vehicle, recreation, and/or even a personal care attendant are all examples of what these assets can be used for.
Keep in mind; very specific language is required when drafting a special needs trust to meet the requirements of eligibility for assistance programs. As long as the trust is properly drafted, your child should be able to gain from the trust assets without losing any existing benefits. This is why hiring an experienced special needs estate planning attorney is so important.
If you have additional questions or concerns about creating a special needs trust, or about special needs planning in general, contact the experienced Texas estate planning attorneys at The Mendel Law Firm, L.P. by calling 281-759-3213 to schedule your appointment today.
Stephen A. Mendel, Estate Planning Attorney
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