You have worked hard to accumulate wealth during your lifetime. After your death, you want to be sure your hard work benefits your children and other loved ones. If you have a child who has a disability, though, it may be risky to give cash or other assets to him or her.
The social safety net, which includes Supplemental Security Income, Medicaid and other programs, requires recipients to have limited financial resources. Consequently, gifting assets to your son or daughter may push him or her over the income threshold for means-tested government assistance.
A trust may solve the problem
According to AARP, it is not uncommon for parents of children with disabilities to set up special needs trusts. After all, rather than giving assets directly to your child, this type of trust merely holds them for his or her benefit. This detail ensures your son or daughter remains eligible for many government programs.
A trust may enhance your child’s quality of life
While your child is certain to appreciate the financial assistance he or she receives from government programs, public benefits are often meager. Specifically, government programs typically only living expenses and basic medical care. This fact may leave your child with inadequate financial resources to enjoy his or her life fully.
That is where the special needs trust comes in. Even though your child may not use disbursements from the trust on the same expenses government programs cover, he or she may spend trust funds on items and experiences that enhance his or her quality of life.
These may include one or more of the following:
- Restaurant meals
- Uncovered medical care and co-pays
- Home modifications and improvements
- Education and training
- Electronic devices
Ultimately, if you want your child to have both ongoing access to government assistance and a fulfilling life, a special needs trust may be an integral part of your overall estate plan.