Estate planning for children with disabilities is important for any parent with a special needs child. When your child has a disability and will need additional support from you for the rest of his or her life, crafting an estate plan to meet these individual needs takes careful planning. Most people who have a child with disabilities create estate plans that others do not need. Knowing how to craft these so they mesh with your other estate planning goals is essential.
Estate Planning for Children With Disabilities: The Special Needs Trust
A special needs trust allows parents of a child with disabilities to provide that child with needed financial support, while ensuring the child continues to receive government-provided assistance. Children with special needs typically receive health care insurance through Medicaid, but only if the children do not exceed specific asset or income limits imposed under the program. With a special needs trust, the parents can provide the child with income or financial support without the child being disqualified for Medicaid eligibility purposes.
Estate Planning for Children With Disabilities: Inheritance Planning
While parents of a child with special needs often create special needs trusts to ensure the child will receive an inheritance and still be able to receive support from available government programs, parents must also ensure the inheritance plans of other family members do not interfere with these goals. Let’s say you establish a special needs trust for your child with disabilities, but your child’s grandparent has an estate plan that leaves the child a sizeable inheritance. Upon the death of the grandparent, your child’s inheritance would disqualify your child for government benefits regardless of your careful work. Because of this, it’s important for parents of special needs children to coordinate their efforts with other family members who might leave their child an inheritance.
Estate Planning for Children With Disabilities: Guardians
Another important aspect of special needs planning includes adding protections for children who cannot make decisions on their own. Once the child becomes an adult, someone may have to make medical or financial decisions on that person’s behalf. While the trustee of any trust created for the child will control trust property, someone will need to make health care decisions for the child. Creating appropriate powers of attorney or securing a guardianship for the child is essential.
Larry Parman
Author, President and Founding Attorney
Parman & Easterday
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