Many parents realize that — as their children become adults — they can no longer protect them in the same ways they could when their children were small. The parents’ job of providing such protection may be done, but the parents’ concern for the child’s wellbeing continues. As such, most estate plans entrust a parents’ estate to a child or children, upon their attaining a certain age.
Adult children inevitably go on to make their own life decisions. Most of my clients acknowledge that mistakes in judgment can and will happen, and that they will always worry about their children, but they believe all will be well in the end. However, parents of a special needs child are typically not afforded the peace of mind that others enjoy.
Special needs trusts (SNT) may be created when there is an inability of a beneficiary to manage funds due to a mental or physical incapacity, and/or where a beneficiary requires (or may require) government benefits. If the child holds assets directly, qualification for government assistance may be threatened. Common governmental programs requiring the protection of an SNT are Supplemental Security Income (SSI) and Medicaid. Both of these programs are needs based, and most SNTs are written to preserve both SSI and Medicaid.
SNTs can be drafted to protect not only children, but spouses, adult siblings and other family members in one’s care or guardianship as well. Many adults are caregivers who spend days and nights caring for loved ones who suffer from longstanding mental illness, dementia, physical disabilities and other disorders. Whether an SNT is devised for a child or an adult, there are many decisions to be made, such as:
- Should all my children be treated equally, or should my special needs child receive more or less?
- Who will take care of my special needs child assets well beyond their 18th birthday?
- If my spouse and I divorce, should child support go directly to the SNT?
- Who will take care of my disabled spouse if I pass first? Where will they live?
- Who will manage my investments on behalf of my incapacitated spouse?
A special needs trust is a valuable tool for the planning of care, passing of inheritance, making a lifetime gift, naming a remainder beneficiary, and many other important wishes. With life’s uncertainties, planning is best done sooner rather than later. If you are the caregiver for a loved one with special needs, I invite you to contact me for a consultation.