Family Estate Planning to Protect Children with Special Needs (part II)

Parents of children with special needs are typically aware that their child may need to be financially eligible for important governmental programs through Medicaid, SSI or the DDD. Under these programs, there is an limit on the amount of assets the child can have. These parents will often consider (1) leaving the child’s share of the estate in a supplemental needs trust, or (2) not leaving anything to that child and asking their other children to provide supplementation when necessary from what they wkill inherit.

Unforseen circumstances could prevent even your best-intentioned child from supporting or supplementing their special needs sibling after you are gone. Your daughter could have debts or legal poblems of her own. Her spouse may object to transferring the inheritance for support of the sibling. Your son may need to pay for college expenses for his own children. And so on. By directing a portion of your estate into a supplemental needs trust, you can protect money for your special needs child and guarantee that the funds will be there solely for this child’s benefit no matter what happens to other family members.

Your own parents may be grappling with the same issue. Consider recommending to them that they put an SNT into their own Wills so that any inheritance by a special-needs  grandchild goes into the Trust. Remind them, though, that not all discretionary trusts would qualify as a special needs trusts.

They may also want to consider create an SNT now, which they  can fund over time, so that for instance, if they make a gift to other grandchildren (to reduce the size of the taxable estate), they can also make a gift for benefit of the special needs grandchild. They could direct a percentge of their annuities or tax defered accounts into such a trust (with all required language of course). They could direct a percentage of life insurance to that trust. The special needs child may have several different relatives who would want to provide funds for him, and they could all transfer gifts into that trust.  So this kind of trust is established during your parents’ lifetime  (an inter vivos trust) and is funded during or after lifetime, or both. The trustee can be a family member or a suitable bank, brokerage trust service, or nonprofit organization which administers such trusts.

Estate planning outs you in control of the arrangements, beacause you make the plan. Planning for the fuiture in this way gives everyone involved peace of mind.

For estate planning that meets your family’s special needs, call 732-382-6070


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