Make plans now for your special needs child after you are gone

July 23, 2017
Kevin Tharpe

Parents who have a special needs child usually want to make sure that the child will be cared for as long as necessary. No one is immortal, so they need to plan for what is going to happen when they pass away.

This isn’t pleasant to think about, but if your child isn’t able to care for himself or herself, you need to take this important step. One thing that you don’t likely want is for your child to have to rely on strangers for care. This is where a special needs trust might come into the picture.

The purpose of a special needs trust

A special needs trust takes assets that you lay aside for your child, even an adult child, and puts it in the control of a trustee. This trustee will dole out the appropriate proceeds of the trust to help care for the beneficiary, your child. The important point here is that the trustee has control over the trust and your child doesn’t have any control.

Impact on income-based benefits

A special needs trust won’t have any impact on the person’s income-based benefits because they don’t have control over the trust. This means that as long as the person meets the requirements for Supplemental Security Income, Medicaid and other similar programs, they can continue to receive those benefits even with the special needs trust in place. Even if your child doesn’t receive these benefits now, setting up the special needs trust can help them to comply with the requirements in the future if necessary.

Must include specific points

The special needs trust can’t contain a statement known as the Crummey Clause, which is an estate tax provision. The trust must contain a note that it is not intended to be a source of basic support for the beneficiary. It should also contain wording that makes it clear that this is a supplemental trust. Other statements regard certain Medicaid provisions, Omnibus Budget and Reconciliation Act, Social Security Operations Manual, and certain points in the United States Code.

As you can tell, there are some very specific considerations that you have to think about when you are trying to create a special needs trust. Making sure everything is handled appropriately can ensure your special needs child is cared for and can give you peace of mind.

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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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