The first few years after learning of your child’s special needs were probably ones of frustration and adjustment. Whether your child’s disability occurred after an accident or at birth, you dedicated your life to his or her care, educating yourself about your child’s unique situation, and making any sacrifices necessary for his or her well-being.
However, if you have not made an estate plan that includes provisions for your child, you are missing out on an opportunity to extend your care and protection beyond the boundaries of your life. With each year that passes without an estate plan, your child is at greater risk of being unprepared if something should happen to you.
If your child receives government benefits such as Supplemental Security Income or Medicaid, you probably know that those benefits are based on financial need. The recipient of those funds may not own more than $2,000 in cash without losing SSI or Medicaid benefits. If you should pass away without making the necessary preparations for your child’s provision, and he or she receives a share of your estate as an inheritance, the government will suspend benefits if that amount is greater than $2,000.
Can your child manage the rest of his or her life without those critical benefits? Will your child have the ability to invest, save and plan for the use of inheritance? These are questions to consider when it may be tempting to procrastinate establishing a special needs trust.
How does it work?
When you create a trust for your child, the trust owns the assets you fund to it. In other words, although your child receives the benefit of using the funds, he or she does not own them. You, the child’s grandparents, and even the proceeds of a life insurance policy or personal injury settlement can add to the trust, which protects your child’s eligibility for government benefits.
A successor trustee — someone you choose to manage the trust after you are gone — manages, invests and disburses the funds, only for the benefit of your child. This is a delicate and often complex job, and you would be wise to learn as much as you can about the regulations and restrictions for the use of the funds.
Understandably, you have a lot to think about and many obligations during a typical day. Perhaps preparing a special needs trust does not seem like a critical task. However, life is unpredictable, and the sudden passing of a loved one catches too many families off guard. To avoid this happening to your family, you may find it helpful to seek answers and guidance from a Texas estate planning attorney.