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Why should parents set up special needs trusts?

On Behalf of | Jan 24, 2020 | Estate Planning |

Individuals tend to repeatedly hear that they need to sit down and draft a will as they get older. They’re often told that their assets may go to someone other than those they intended unless they document their wishes. Wills aren’t just for older people, though. They’re for younger individuals too. However, you may need more than a will if you have a child with special needs. You may also need to set up a trust if your son or daughter is reliant upon you and/or government benefits for their care.

If your child receives Supplemental Security Income (SSI), then they likely also qualify for other government benefits such as subsidized housing, vocational rehabilitation and Medicaid. Your and your child may count on these to get the medical care that they need, as a way to have a roof over their head and to cover their basic expenses. If your son or daughter were to lose any of these benefits and you were no longer around, then they could become homeless and destitute, especially if they’re unable to work.

Parents who draft their wills leaving behind lump sums of cash or valuable assets to their special needs child have good intentions to cover their future caregiving costs. However, moms and dads who leave assets like these to their special needs kids do a disservice to them. Parents put their kids at risk of losing their invaluable government benefits when they will these things over to them.

One of the best things that parents with disabled children can do is to set up a special needs trust for them. You can place virtually any assets into this. This will keep these valuable items from being taken into account when Medicaid and the Social Security Administration assess your child’s financial eligibility for benefits.

Virtually any proceeds that your child may receive from a lawsuit or as inheritance may also be placed into this special needs trust. It protects them from being touched by potential plaintiffs if they were to file suit against your child.

You need to use specific language when setting up a special needs trust. You put the assets you intend to leave behind for your child and leave their government benefits up to chance if you fail to do so. An estate planning attorney can help you set up a special needs trust that helps ensure your intended results.