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Using your estate plan to provide for your disabled adult child

| Jun 18, 2020 | Estate planning |

When your disabled child was young, you took steps to meet his or her needs. Now that your son or daughter has grown into an adult, you are probably looking for ways to continue to provide basic support. Establishing a special needs trust as part of your overall estate plan may be the solution. 

A special needs trust sets aside funds for the benefit of your disabled child without actually transferring ownership to him or her. Accordingly, your son or daughter remains eligible for government programs that have income restrictions, such as Medicaid and Supplemental Security Income. Before forming a special needs trust, though, you should understand the nature of these trusts. 

Limited government benefits 

When your adult child applies for needs-based benefits, he or she must meet income guidelines. Therefore, if you gift money, your child may be ineligible for essential benefits. On the other hand, if your child qualifies, he or she may use limited benefits for specific purposes, such as housing, food or medical expenses. These often-skimpy benefits typically do not leave much for other expenses, such as travel or recreation. 

Supplemental expenditures 

If you establish a special needs trust, you give your son or daughter access to funds that may enhance his or her quality of life. You must be certain trust funds only go to supplemental expenses, however. If your child uses disbursements to cover ordinary or everyday costs, the special needs trust may interfere with government benefits. Nevertheless, if you want your child to have a comfortable life, giving him or her access to special needs funds may help you accomplish your goals. 

Trust oversight 

Establishing and maintaining a special needs trust can be somewhat challenging. Fortunately, you do not have to have in-depth knowledge about this estate planning tool. 

When you form the special needs trust, you designate a trustee to oversee it. Not only does this individual protect your funds by responsibly managing the trust, but he or she also protects your child’s interests by safeguarding eligibility for government benefits. As a result, you achieve peace of mind, knowing the trustee is looking out for your adult child’s needs.