When should you include a Special Needs Trust in your estate plan?

When should you include a Special Needs Trust in your estate plan?

| Nov 9, 2020 | Estate Planning |

Children with special needs require a different kind of responsibility from their parents. Even as a child with special needs reaches adulthood, you will need to provide continuing care and support. According to Forbes, parents should use estate planning as a tool to prepare for their children’s futures, even after the parents’ death. Putting a plan in place will ensure that your special needs child will be cared for by someone you trust.

If your child meets certain conditions, you should consider the use of a Special Needs Trust.

Your child requires government benefits

After you die, your child may have to rely on government benefits. Benefits such as Medicaid and Supplemental Security Income or SSI require a means test. The means test requires the person to have a limited income and asset source. A person who has more than $2,000 in monthly income is not eligible for these benefits.

If you pass your assets to your child without the use of a trust, then you may disqualify him or her from government benefits. Instead, you can use a special needs trust to support your child without interfering with his or her government benefits.

Your child cannot support him or herself

A person who cannot support him or herself does not have unlimited access to resources. He or she may not have the ability to work. While government benefits supply food, shelter, and medical care, they do not guarantee your child’s quality of life. Use a Third-Party Special needs trust to set aside assets for education, entertainment, utility bills and most other expenses. To ensure that the government does not interfere, you can specify that your child cannot use the distributions for medical expenses, shelter, or food.