Estate planning is important for everyone whether they have children or not. But having the right documents in place is perhaps even more important for people who have a special needs child. If a parent of a special needs child does not plan appropriately, then assets could be passed to the special needs child in such a way that the child might lose important government benefits.
There are several government programs that offer benefits and support to disabled people. Some of these programs are Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), Medicare, and Medicaid.
SSI and Medicaid are what they call “needs-based” programs, so to qualify the child must meet strict income and resource criteria. To qualify for either of these programs the child must not own more than $2,000 in assets. So if you were to directly give a special needs child a significant amount of assets, then that child would not qualify for these programs. And let it be known that not all people who receive these benefits are poor. Many families with resources access these benefits for their special needs child.
To help make sure a special needs child does not lose access to these benefits you can create what is called a Special Needs Trust with certain wording that makes it a Supplemental Care Special Needs Trust. This wording states that the assets in the trust should only be used as a supplemental, secondary source of support after using up all available benefits from government programs. This helps ensure that the assets that you leave for your special needs child will be sufficient to provide all the basic needs for the child throughout the rest of his or her life.
Having said that, if you believe that you are well-off enough to be able to leave sufficient assets to your special needs to child that will fully take care of him or her without any governmental assistance, then you could create what is sometimes called a General Support Special Needs Trust. This kind of trust is designed to take care of all the financial needs of the special needs child without any need for any assistance from government programs like SSI or Medicaid. This is a big decision though, so you should make it carefully.