If you are the parent of a child with special needs, you already know that parenting, in general, requires a little extra planning on your part to ensure that your child’s needs are met. You may also recognize the heightened importance of estate planning as the parent of a child with special needs. What you may be unsure of, however, is when to start special needs planning. At what point in your life, or in your child’s life, should you begin to incorporate special needs planning into your overall estate plan? As is often the case when it comes to estate planning questions, there is no universal, “one size fits all,” answer to that question. Given the fact that a primary function of estate planning is to plan for the unexpected, however, it is safe to say that it is never too early to start special needs planning.
Raising a Child with Special Needs
Raising a child with special needs can be financially challenging. As a parent, your sole concern is that your child is happy and healthy; however, the reality of caring for a child with special needs is that the costs involved can be extremely high. Specialists, medications, therapies, and specialized medical equipment are just some of the added expenses that often go along with raising a child who has special needs. The good news is that there are a number of state and federal assistance programs, such as Medicaid and Supplemental Security Insurance (SSI), that will help defray the expenses incurred by the parents of a child with special needs. Qualifying for the various assistance programs may be relatively simple while your child is a minor; however, once your child becomes a legal adult, care must be taken to avoid jeopardizing eligibility. Special needs planning can help.
Don’t Wait to Start Special Needs Planning
One mistake parents often make is to put off incorporating a special needs plan into their estate plan because they are operating under the impression that it is not necessary until their child reaches adulthood. While the need for special needs planning may become more immediate and more noticeable when your child reaches the legal age of majority, it is never too early to include a special needs planning component into your estate plan. Doing so ensures that both current and future assets intended for your child are protected while simultaneously protecting your child’s eligibility for much needed assistance programs. This is typically accomplished through the creation of a special needs trust, also referred to as a “supplemental needs trust.”
A special needs trust is an irrevocable trust that is specifically designed to take possession of assets intended to be used for the “supplemental” care of a child or adult with special needs. If gifted directly to an adult with special needs, the value of those assets often exceeds the limit for assistance programs such as Medicaid and SSI. As a result, the recipient loses his or her eligibility for assistance. By making indirect gifts into the trust, however, the assets are legally owned by the trust instead of the beneficiary and, therefore, are not counted when evaluating eligibility.
Well-meaning family members may make gifts to your child at any time which is one reason why it is a good idea to start special needs planning early on in your child’s life. The assets held in a special needs trust can then continue to grow as your child grows, providing a nice “nest egg” to help supplement the assistance your child receives as an adult from the various assistance programs.
Please take a moment to download our FREE estate planning worksheet. If you have questions or concerns relating to special needs planning, contact the experienced estate planning attorneys at the Law Offices of Kobrick & Moccia by calling 800-295-1917 to schedule your appointment.