Planning for Special Needs Children
Most parents care for their special needs children at home for as long as they possibly can. However, there will come a time, whether due to illness, old age, or, ultimately, death, when parents can no longer care for their special needs child. What will happen then? Where will the child live? Who will take care of him or her, not only to provide shelter, but for support and guidance? Who will pay the bills? You can see that advance planning by parents is essential. It can make all the difference in the life of a special needs child, and that of his or her siblings as well.
In addition to the “life issues,” such as living arrangements and care planning, there is a legal dilemma posed when it comes to special needs children. The issue is that such children have a very great need for funds, but will be cut off from government benefits if they own more than a token amount of assets. In addition, there is the practical problem that many special needs children have, at best, a limited capacity to handle money. In order to deal with this dilemma, people sometimes leave an inheritance intended for the special needs child to one of the other children, with the expectation that the other child will use it for his or her brother or sister. This option, however, is fraught with difficulties. Legally, the money belongs to the sibling, and not the special needs child. As such, it is subject to creditor and divorce claims, and is at risk if the sibling dies prematurely or otherwise spends the money.
For these reasons, any funds that a parent leaves to a special needs child should be left in the form of a “Special Needs Trust.” This is a type of trust which allows a disabled beneficiary to receive gifts or other funds and still qualify for government benefits. The trust funds are there for your child, but are not considered to be assets when the child applies for SSI or Medicaid. An Special Needs Trust is not meant to substitute for the basic support and medical care that the government will provide. Rather, such a trust pays for the “extras,” such as better clothes, trips, entertainment, education, training and counseling and whatever else your child may need.
By using Special Needs Trusts, we are able to achieve these goals, and give parents peace of mind that their children will be cared for in later years.