By Fredrick P. Niemann, Esq., a NJ Special Needs Attorney
Any parent of a disabled child is well aware of the daily challenges they are presented with. Caring for a child with special needs involves many unique considerations. Estate planning is arguably the most important of these considerations. Parents want to help pay for as much as they can to assure their children live a happy life and are properly cared for, but want to make sure their children still qualify for the public benefit programs that are available to them. This can be a difficult task, as government assistance programs are based on the amount of assets your disabled child has at their disposal. Therefore, how you decide to pass your assets onto your child can determine whether or not he or she receives assistance from government programs such as Supplemental Security Income (SSI), Social Security Disability Income (SSDI), Medicare, and Medicaid. Estate Planning is thus a crucial area for parents of disabled children.
There are four main options that parents of disabled children are presented with. First, you may disinherit the child. This may be the best option for families with modest income and a child with significantly expensive needs. By disinheriting your child, you ensure they qualify for public benefits programs since they have no means income or assets, but this forbids you from financially assisting them. Second, you may gift assets to the child directly. This is likely to disqualify them from the government programs however, and may even cause the state to back-charge the child for care and treatment already received. This option is only recommended for parents who are extremely wealthy and have a child who although disabled, is capable of managing the funds given to them.
The third option is distributing your assets to another one of your children who will then care for the disabled child. This can be a risky option for a few reasons. By distributing the assets to the sibling of the disabled child, you expose the assets to creditors or the sibling as well a potential claim in a divorce proceeding. There is also the risk or mismanagement or even abuse of the funds by the sibling.
The final option and often the most recommended are placing the assets in a Special Needs Trust. This allows you to supplement your child’s life with some private funds while at the same time preserving their qualification for government assistance programs. As a parent, you also ensure the proper management of the funds by choosing a qualified trustee to handle your assets rather than the disabled child themselves, but limiting the discretion of the trustee. You therefore have a situation where you can provide for your child but still allow them to receive help from public benefit programs.
A Special Needs Trust is extremely complicated and specific. There are numerous considerations that go into each trust and must be tailored to your situation specifically. It is important that you seek an experienced Trusts and Estate Planning attorney to help you create such a trust and make decisions as to whether the trust is testamentary or inter vivos, revocable or irrevocable, and decisions on other critical tax considerations.
Fredrick P. Niemann, Esq. is a knowledgeable Estate Planning and Trusts attorney who has assisted families in setting up all types of trusts over the years. Please call him today at 888-800-7442 or email him at firstname.lastname@example.org/. He will be glad to meet with you to discuss your special needs.