One good reason for creating an estate plan is to give us peace of mind that, if we pass away before our children are grown, they will be provided for financially. This concern generally fades as the kids grow up, get jobs and start to take care of themselves.
But some children will never be able to be financially independent, due to a disability. For parents of a child in this situation, making sure they will be taken care of after the parents are gone is a top priority.
An inheritance or payment from a related personal injury claim could go a long way to ensuring a disabled son or daughter does not have to worry about money, despite not being able to earn an income. But standard means of passing these assets along to the child can cost them their Medicaid, Supplemental Security Income and other government benefits.
To avoid this, parents can set up a special needs trust. As the name implies, this is a trust set up for the benefit of one or more disabled people who typically lack the mental capacity to manage their own financial affairs.
As with other types of trusts, a special needs trust is administered by a trustee. You can name trusted family members as trustees, or the court can appoint a third party. Choosing the right trustee is something you should not take lightly when setting up the trust.
Besides the fact that a special needs trust does not disrupt the beneficiary’s ability to receive government benefits, it is designed to meet the unique needs of the beneficiary’s disability. Parents of children with intellectual disabilities who are creating or amending their estate plan should discuss this option with their attorney.