I have a special needs child: how do I split my estate?

February 25, 2021
Kevin Tharpe

Planning for the future of your children can seem complicated enough, but it can be even harder when you have a special needs child. You may have decided to create a special needs trust to provide for your loved one. In the process, you should also figure out how to divide the rest of your estate between your special needs child and other children you may have.

Exactly how you should design your inheritance for your children will depend on your current family situation. U.S. News and World Report provides some information that may help you to figure out the best course of action for your estate.

Whether to fairly distribute your estate

Dividing your estate equally among your children might seem unfeasible with a special needs child. You know your disabled child has needs and may require more money than your other children. However, you should keep in mind that your special needs child may qualify for government programs, so you might not have to leave a lopsided amount.

Also keep in mind that your special needs child will likely have an income threshold for government benefits. Allowing your child to inherit too much money may disqualify him or her from receiving government assistance. However, you may look for ways to get around this like allowing the special needs trust to inherit money and not your child directly.

What to do with your insurance

You may have a life insurance policy that can pay out to your children upon your death. Still, you may run into problems if you name your special needs child as a beneficiary. The insurance proceeds may cause your child to exceed income limits and lose government benefits. A possible way to avoid this is to name the special needs trust as a beneficiary, allowing the trust to receive the money instead.

Discuss your estate plans with your children

Keep your children in the loop when you make your estate plans. They should understand if you have to give more money in an inheritance to a special needs sibling. They should also know if you are considering one of them as a trustee for a special needs trust. Some siblings do not want the job or may not have the right skills for it. Discussions like these can keep your estate plans on track and minimize family conflict.

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Kevin Tharpe

With 25 years of experience, Kevin understands how estate planning, special needs planning, and government benefits programs work together. This is a crucial element of a thorough plan. He explains your eligibility for benefits programs and ensures that you do not make costly mistakes that may disqualify you or deplete your assets.

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