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Estate Planning for Special Needs Children

Jeff and Julie came into the office based on their financial advisor’s recommendation. In their late 40’s, they had never done any estate planning. Unfortunately, they were not unique in procrastinating to get proper planning done. However, they had a unique circumstance in that their youngest daughter had been diagnosed with Down’s Syndrome. I explained the basics of estate planning, and why using a revocable trust as opposed to a will-based estate plan was much more appropriate in their case based on their financial circumstances. I also explained the importance of planning when you have a child with special needs. After explaining that even though the child was not receiving any public benefits today, that she could become eligible to receive both Supplemental Security Income (SSI) and Medicaid benefits after she turns 18. However, both of these programs have asset tests. This makes it very difficult to leave any inheritance for the benefit of the child without interrupting these benefits, that can be critically important for the child to maintain. For instance, it would likely be impossible for the child to obtain health insurance on her own, and Medicaid coverage will function as her health insurance, particularly after the death of her parents.

By using a properly drafted special needs trust, the daughter can get the best of both worlds- funds available to pay for things that aren’t provided by Medicaid, but still not jeopardizing the ability to receive public benefits. Additionally, by setting the trust up now, it is possible to allow other family members (like grandparents) to contribute to the trust without the need to setup multiple trusts. Finally, we spent time discussing what would happen to their daughter in the event of her parent’s death or incapacity. Things like where she would live, and things that the caregivers would need to know to effectively take care of their daughter, and goals that the family would like to see for the daughter. They had never thought about the years of knowledge that they had acquired in raising their daughter, and how difficult it would be for someone to step into their shoes with no preparation.

At the conclusion of the process, Jeff and Julie felt that they were much better prepared for the future, and needed to explain how important this process was to their friends that had children with special needs. Proper estate planning provides peace of mind!

Learn more about how the Weeks Group can help you with Special Needs Planning.