Many people will associate the term “special needs planning” with the planning to provide for a special needs child if you should die unexpectedly. However, the term special needs planning encompass a variety of advanced planning considerations for a special needs child and special needs adult child.
Having a life-long best friend of over 20 years who has an adult sibling with special needs, I am keenly aware of the planning considerations that need to be put in place in order to properly plan for the care of a child with special needs well into his or her adult years. However, there are a variety of types of special needs planning that a family of special needs child should consider and discuss with an estate planning attorney given the special and unique set of circumstances for the family.
The first type of special needs trust that I will discuss is referred to, in legal terms, as a supplemental special needs trust. The term supplemental refers to the goal of the trust to “supplement” the needs of the special needs child in addition to the government benefits that the child qualifies to receive during his or her lifetime. A common government benefit program that can assist a child of special needs is called Medicaid. This is a program that can be used to assist individuals with medical care costs. However, Medicaid should not be confused with Medicare, and is a government benefit program that you must qualify for. Therefore, receiving large gifts from family members could limit or even disqualify the special needs child from the government benefits that he or she requires.
A supplemental special needs trust can be an appropriate planning tool to supplement the special needs child’s government benefits that he or she receives, and in a way so as not to disqualify that child from certain government benefits. In addition, these trusts can be set up with the special needs child’s own assets or with assets from another family member or another individual.
However, you should speak with a knowledgeable and experienced estate planning attorney when setting up a special needs trust as the rules in order to maintain government benefits are specific, as are the rules when it comes to establishing a supplemental special needs trust. As such, it is very easy to inadvertently disqualify your child for the government benefits that he or she requires thereby forcing you to spend down your own assets before qualifying for government benefits.