Family estate planning to protect children with disabilities

When it comes to designing an estate plan there is no “one size fits all” because each family is unique. You may have a young adult child with profound disabilities who will never be self sufficient and will require extensive support. Or you may have a child who is developing a certain degree of independence with work activity or ability to live outside your home despite their physical or intellectual challenges, and you want to make sure that those capabilities are encouraged and supported.

In either of these situations, maintaining eligibility for means-tested governmental programs like SSI, DDD, Section 8 and Medicaid may be vital. Each of these programs has income limits and resource limits. You may want to include a Supplemental Needs Trust in your Will and direct the child’s share of life insurance, IRAs or other inheritances into that trust. Although a general discretionary trust or a support trust may be appropriate for your other children, it could be disastrous for a child with disabilities by causing ineligibility.

Are your parents thinking of excluding the disabled child from their estate plan for fear of disrupting benefits or because they think s/he “won’t need anything other than governmental benefits?” The availability of housing for intellectually disabled NJ residents has dried up. There may be long waiting lists for other services. Nursing or health care services may be limited. A carefully crafted trust can supplement these absent benefits. One option is for your parents to include a supplemental needs trust in their own Wills.

Another option is that you could establish a supplemental needs trust now as an inter vivos  “stand by” supplemental needs trust which can be funded from time to time. You would get an IRS EIN# for the trust and seed it with a minimal amount such as a $100 bank account, You can be trustee for your child, and you can select the successor trustees. Your child’s grandparents can then periodically place gift money into that trust. They could name it as a beneficiary of some percentage of their life insurance policy. They could include a bequest to that trust in their own Will. In this way grandparents can provide funds for the disabled grandchild without creating a trust under their own Will.

See prior post on 9/24/14 and our website for more about SNTs.

Call for appointment concerning estate planning and trusts for special needs … 732-382-6070

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