Planning for the Child with Special Needs

Estate Planning for the Child with Special Needs

For parents of a child with special needs, estate planning means thinking about their child's long-term future. With an adequate estate plan, parents can provide for their child to receive quality care and financial security when they are no longer present.

1. Quality Care

Once the parents are no longer available to provide for the care of the child, the questions arise: who will care for the child? Who will meet their emotional and spiritual needs and ensure their quality of life?

These questions should be discussed in advance with those family members who will presumably be able to watch over the child's welfare when the parents are no longer available to do so. It is best to prepare a written memorandum discussing the particular needs of a child with special needs, for example social, medical, spiritual, work, and strategies to deal with day-to-day issues that may arise.

Parents as part of their estate planning must appoint a Guardian of the Person for a child with special needs. They should discuss the responsibilities of the personal guardian with the guardian that they appoint. Usually the guardian is a family member.

2. Financial Security

Equally important, is providing for the financial security of the child with special needs once both parents are no longer available. The parents must designate someone to be in charge of the child's financial affairs.

It is also of paramount importance that parents transfer their assets at death in a manner which will not disqualify their child for governmental benefits to which they are entitled. As of 2008, if an individual has assets of more than $2,000.00 they are disqualified from receiving Supplemental Security Income. Likewise if a child receives income that is over the specified limits their SSI benefits also may be lost. As health care costs continue to rise, it is frequently critical that the child's income do not exceed the limits and cause the child to lose Medicaid (health insurance benefits). Medicaid is critical for a child once the parents are gone and the child is not covered under the parents' health coverage.

3. The Special Needs Trust

The best method of providing for the financial future of a child with special needs, is to set up a special needs trust for the child. The special needs trust typically receives a share of the parents' estate, while the other children also receive shares. Assets transferred to a special needs trust are not considered to be the property of the child and therefore do not affect the child's eligibility for benefits.

The special needs trust is much superior to the traditional method of disinheriting the child and transferring the assets directly to a family member for the benefit of a child with special needs. The traditional method is not prudent because that family member may die, become disabled, become subject to a judgment, or go through divorce, which may lead to the loss of the assets that were intended to pay for the special needs of the child during their lifetime.

The special needs trust is also superior to a third method, which is to transfer the assets to a Guardian of the Estate of the child. This does not work very well because assets transferred to a Guardian of the Estate are still considered to be owned by the child, and therefore disqualify the child from receiving governmental benefits.

Conclusion

If you have a child with special needs, you need to do estate planning to see  that the child has quality, loving caregivers, and that they also have financial security. In order to do this, you need to designate a future personal guardian for the child, and to communicate with this guardian and other family members about the child's needs. And you should also establish a Special Needs Trust to hold that child's share of your estates, so as not to disqualify the child for governmental benefits, including Social Security and Medicare, to which that child is entitled.

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King Law Offices, LLC
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Madison, WI 53705

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