Parents of children with disabilities face unique challenges when creating an estate plan.
Providing for the financial well-being and care of a disabled child requires careful consideration of various factors, including government benefits, special needs trusts and guardianship. By addressing these concerns in an estate plan, parents can help ensure their child receives the necessary support and care throughout their lifetime.
Preserving eligibility for government benefits
Many disabled individuals rely on government benefits, such as Supplemental Security Income and Medicaid, to cover basic living expenses and medical care. However, these benefits are often means-tested, meaning that an individual’s eligibility depends on their income and assets. To prevent a child from becoming ineligible for these benefits, parents should carefully structure their estate plan to avoid leaving assets directly to the child.
Establishing a special needs trust
One way to provide for a disabled child without jeopardizing their government benefits is to establish a special needs trust. This type of trust holds assets the trustee can use on behalf of the disabled child to pay for expenses not covered by government benefits, such as education, therapy and recreational activities. A trustee manages the special needs trust and distributes funds for the benefit of the child, ensuring that the assets in the trust do not disqualify the child from receiving essential benefits.
Appointing a guardian and successor trustee
In addition to establishing a special needs trust, parents should consider appointing a guardian for their disabled child. A guardian is responsible for making personal and medical decisions on behalf of the child when the parents are no longer able to do so. Similarly, parents should also appoint a successor trustee to manage the special needs trust in the event the original trustee is unable or unwilling to serve.
By thoughtfully addressing the unique needs of a disabled child in an estate plan, parents can help ensure their child receives the care and support they need throughout their life.