Protecting Special Needs Kids—9/18/08

INTRO: You’re taking care of your disabled child and hopefully, you’re doing okay.  But what will happen when you’re gone?  If you plan ahead, you should be able to make sure your child is protected. 

1. IS IT ENOUGH TO LEAVE AN INHERITANCE FOR YOUR CHILD?

A. No, not if you want to protect your child after you’re gone.  There are two big problems with leaving money or property to an adult child with disabilities.

First, can the child manage the inheritance?  If the disability is mental or emotional, that could be a major problem.  If the disability is physical, managing money could still be a problem, particularly if the child is not mobile!

Second, is the inheritance enough to provide for all of the child’s needs for life?  If not, leaving money outright to a disabled child may be a bad idea.  Here’s why: if your disabled child has money, he or she cannot obtain any public benefits, such as Medicaid, SSI or food stamps.  The child will have to spend the inheritance until it’s gone.  Once the inheritance has been used up, then the child may receive those public benefits.  But public benefits don’t cover a lot of comforts of life.  They are very basic.  For example, they may pay for a nursing home, but not for other housing options.  They may pay for basic food needs, but not for transportation, telephone, or cable.

2. HOW CAN WE PROTECT A DISABLED CHILD?

A. For many people, the answer is a special needs trust.  With this trust, you can leave an inheritance for a child and place someone you trust in charge of managing the money.  Perhaps the money should be managed by another one of your children, or by another trusted family member, or even a trusted friend.  If there’s no one, you could name a professional manager, such as a bank trustee.

3. ANY OTHER BENEFITS TO A SPECIAL NEEDS TRUST?

A. Yes. A Special Needs Trust can be used to preserve a child’s eligibility for public benefits.  So even though you’ve left an inheritance, the child can still get Medicaid, SSI and food stamps.

And since public benefits only provide very basic support, the trust funds can be used to supplement the public benefits, providing more of the comforts of life.  It’s a wonderful way to protect a disabled child.

4. IS A SPECIAL NEEDS TRUST JUST THE SAME AS A REGULAR LIVING TRUST?

A. No. A regular trust will not protect a disabled child adequately.  A Special Needs Trust is a very specialized trust that must satisfy a number of legal requirements for it to work.

5. WHERE DO WE GET A SPECIAL NEEDS TRUST?

A. A Special Needs Trust is only part of the planning that may be needed to protect a child with a disability.  To get help, you should seek the services of a lawyer experienced in dealing with the needs of people with special needs.

CLOSE: Make sure you have prepared for the day you’ll no longer be able to care for your disabled child.