Parents who have children with special needs have unique estate planning needs. Unfortunately, one aspect that a parent may never consider is what will happen after I am gone, or after both myself and my spouse are gone? All too often the parent may believe that another sibling, aunt or uncle, or friend will come forward to provide care for the child. However, this can lead to family disagreements and fights that result in the decision of care for the child being aired out in the court system.
For this reason, it is imperative that you plan for the long term care and needs of your special needs child. A very important tool to plan for the long term care of your child is with a Special Needs Trust. First, this type of trust must be irrevocable. This means that once you create the trust and transfer assets into the name of the trust, you will never be allowed to revoke this trust. Second, this type of trust allows a specific set of funds to be set aside to be solely used for the care of your child after your death. For example, let’s say that your special needs child is 28 years old when you and your spouse unexpectedly pass away. However, before you and your spouse die, you set aside $300,000 in the special needs trust to provide for the care, education, and welfare of your child. Therefore, since you established this special needs trust, and properly funded the trust with $300,000, the successor trustee of this trust will be obligated to only spend these funds on the care of your child that you leave behind.
Another important aspect of special needs trusts is that they can properly preserve your child’s eligibility for certain government benefits. For instance, Medicaid for example, only allows you to have $2,000 worth of assets in your name in order to qualify for Medicaid assistance. However, if you pass away and leave your inheritance to your child, even with your assets in the custodian of a guardian, those assets will be considered your child’s assets for Medicaid purposes. However, by establishing a special needs trust, which is irrevocable, you may be able to successfully preserve your child’s eligibility for government benefits.
In addition, a special needs trust can be used to effectively provide for how you wish for your special needs child to be provided for after you are gone. For instance, do you want the child to reside with a sibling or other relative? Or do you want the child to reside at a long-term medical care facility? These types of decisions can be used with a special needs trust that creates the obligation of the successor trustee to following the family wishes when it comes to the care of your child after you are gone. In addition, it is equally important to have these discussions with your family so that everyone understands your wishes and your child’s wishes in the event of you and your spouse’s death.