Use Care When Planning For Special Needs Children

Being a parent comes with great joy but significant responsibility.  It is no different for parents of children with special needs. In some situations, careful planning can be critical to address a family’s financial needs.  Parents must not only plan to care for their children during their lives, but they must also take steps to ensure they have a plan in place if their child is not able to support or care for themselves when they are gone.  When is the right time to plan?  It is never too early to begin to plan for your child’s care.  As housing and work options may be limited when persons with disabilities reach the age of majority, financial planning must be addressed to ensure there are assets available to cover the long term costs to care for your child. 

COMMON MISTAKES

  • If your child is receiving government benefits, naming your child as a direct beneficiary may disqualify them for needed benefits
  • Disinheriting your child, or directing your special needs child’s inheritance to another family member with the understanding the money will be used to care for your child should be considered with exreme caution.  A lawsuit, divorce, or bankruptcy would subject the assets earmarked for the care of your child to great risk
  • Failing to name a dedicated trustee that will be involved in the life of the child. Naming a trustee to merely distribute the assets, and have no other involvement in the child’s life, may not be the best option

One effective planning tool is the use of a special needs trust.  A special needs trust holds assets earmarked for the costs of caring for your special needs child and distribute those assets for the benefit of your child without jeopardizing eligibility for government benefits.  A comprehensive and often reviewed estate plan will ensure that your special needs child is cared for when you are no longer able to.