The parents of children with special needs have unique estate planning concerns. They have oftentimes been the full caregivers for their children, and want to ensure someone will be there when they pass. They also do not want their children to potentially lose any government benefits they receive, like Supplemental Security Income (SSI) or Medicaid, because health care costs can be massive, and the special needs child often lacks the ability to support himself or herself.
There are several types of estate planning tools tailored to address these unique planning challenges. The two most often used are Support Trusts and Special Needs Trusts.
With a Support Trust, the Trustee makes distributions for a child’s support. The assets of a Support Trust can only be used for necessities such as shelter, food, medical care, clothing, and educational services. The beneficiary of a Support Trust is not eligible to receive additional financial assistance through SSI or Medicaid. Therefore, if a child relies on those benefits, a Support Trust is not the best estate planning tool.
A Special Needs Trust also makes distributions for a child’s support, but it’s special design allows the beneficiary to maintain eligibility for SSI and Medicaid. This makes a Special Needs Trust an extremely effective tool for looking after a child with a disability. The creator of a Special Needs Trusts can make it a stand-alone trust funded with separate assets or it can be a sub-trust in an existing trust.
Just as there are many options when it comes to taking care of a child with special needs, there are also different kinds of Special Needs Trusts. One type of Special Needs Trust is a Third-Party Special Needs Trust, which is funded by a child’s parents’ as part of an estate plan. Another type of Special Needs Trust is a Self-Settled Special Needs Trust, which is usually funded with the child’s own assets from a lawsuit settlement.
Special Needs Trusts are a necessary estate planning tool for families caring for someone with a disability or special need. The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Special Needs Trust, contact The Astill Law Office at 801-438-8698.