If you are parents or grandparents to children who have special needs, you may have a lot of questions regarding what can and should be done to prepare for their continued care after your passing.
The biggest question I answer for people is what needs to be done and how we can do it with respect to your estate plan to make sure the child will be taken care of without preventing them from qualifying for and/or receiving governmental aid. From an estate tax perspective, the considerations do not differ. The main goal you need to accomplish is to make sure any assets you put aside for either a child or adult who is receiving or may receive, governmental benefits is to make sure they are transferred to a “Supplemental Needs Trust” rather than given outright.
Special needs trusts are a very useful estate-planning tool in the right situation. You have many options with respect to how you set up the trust and the restrictions you place on the trustee regarding how those assets may be used. A classic example is that governmental benefits generally may be used to cover expenses such as food and shelter, but the funds in a special needs trust may be used for supplemental needs, such as utilities, medical care, education, travel, hobbies, etc. Also, special needs trusts can dictate to whom the remaining assets should be paid upon the death of the special needs person.
One thing to keep in mind is that it is common to name individual people as beneficiaries on various types of financial accounts (IRAs, pensions, life insurance, etc.). Never name a special needs person as a beneficiary on any of these types of assets as this can count against, and even disqualify them, from receiving governmental aid. Name the trust instead. Under no circumstance do you want a special needs person receiving a large sum of money directly. With the trust, the person will continue to be able to qualify for governmental aid and the trust can stipulate how the money it holds is spent, what it can be spent on, etc.
Please, if you have any questions, do not hesitate to contact me. Taking care of your family members is of the utmost importance and I truly enjoy helping people in this manner.