Best Ways to Plan Your Estate When You Have a Child with Special Needs

Planning for death can be an unpleasant experience for anyone. It often comes with uncomfortable conversations and difficult decisions. However, creating an estate plan is one of the most important things you can do in life. If you want to protect your loved ones and ensure they receive the care and assistance they need when you’re gone, you should address these concerns now.

When you have a special needs child, adequate planning is required to be sure they receive the care they need after you die. It’s critical to choose a guardian to take over your role. You must establish who will assume responsibility for their daily needs, healthcare, and other important decisions.

Below are tips you should follow while creating an estate plan for your child with special needs.

Establishing Benefit Eligibility for Special Needs Children

A Will explains how a person wants their assets distributed when they die. You can create one to ensure your beneficiaries receive specific property you want to leave behind, such as homes, vehicles, bank accounts, and retirement plans. Drafting the legal documents is fairly straightforward.

However, estate planning can be a challenge if it involves a child with special needs. Eligibility restrictions exist for specific federal benefits that disabled individuals could have trouble receiving.

When you’re considering an estate plan, you should take the necessary steps to protect your child’s access to certain government benefits, such as:

• Supplemental Security Income (SSI)
• Medicaid
• Supplemental Nutrition Assistance Program

Conditions to receive such benefits include low income and limited assets. You’ll need to take into account how any bequest you leave them will affect their low-income status and, indirectly, their needs-based benefits. It may be necessary to direct any inheritance into a Special Needs Trust so the funds are not held directly in the child’s name.

Creating a Trust for a Special Needs Child

Again, a Special Needs Trust can be used to protect assets for a loved one with disabilities. There are three types of trusts for special needs children you can choose from. They include:

• First-party Special Needs Trust – A first-party trust holds assets that would transfer directly to the special needs child under other circumstances. This type of trust is an excellent choice because there aren’t restrictions on how to use the money. However, the money left in trust must first repay the state for medical assistance provided by Medicaid before transferring to the beneficiary.
• Third-Party Special Needs Trust – Typically, family members create this type of trust to benefit a special needs child. Any assets not in the beneficiary’s name can be held in trust, such as the parent’s income-producing property or life insurance policy. The child named as the beneficiary can use the funds for expenses such as transportation, entertainment, home maintenance, and ongoing bills such as cable and internet
• Pooled Special Needs Trust – A nonprofit organization administers a pooled trust from the combined resources of multiple beneficiaries. Each named beneficiary has access to their own account and can receive a portion of the entire earnings in the trust. Someone else must have always owned the resources used to fund the account.

ABLE Accounts

If you have a child with special needs, you should think about setting up an Achieving a Better Life Experience (ABLE) account. An ABLE account gives individuals an opportunity to set aside as much as $15,000 every year in interest-earning savings if they become disabled before turning 26 years old. Anyone can contribute to the account, including the Designated Beneficiary. The earnings on investments are tax-free and tax-deferred as long as your child uses them for disability expenses, such as education, housing, and transportation.

 Getting Started

Planning for a child with disabilities involves extra layers of protection and care. Providing for their long-term health and stability also means establishing a solid estate plan so they receive the financial assistance necessary to thrive. Contact our Woodbridge special needs lawyers today at 703-492-9955 to discuss your options and receive the guidance you need to prepare for your child’s future.