We are often asked by parents if it is possible to protect an inheritance for an adult child who battles Bipolar Disorder. Unfortunately, one of the hallmarks of the disorder is excessive financial spending while in the mania phase of the disease. Parents often worry that if they leave an inheritance outright to their adult child that it will be lost or squandered quickly and that mom or dad will no longer be around to help deal with the fallout of such spending.
Fortunately, there are legal tools that parents can utilize to safeguard an inheritance for an adult child with Bipolar Disorder to ensure that the money lasts as long as possible. This is especially important if the child’s illness is severe enough to prevent him or her from working. One such tool that we recommend to achieve this goal is a Third Party Special Needs Trust.
Third Party Special Needs Trusts can be used to safely protect assets for individuals with disabilities, which often includes severe and disabling mental disorders such as Bipolar Disorder. Essentially, the funds held in a Third Party Special Needs Trust can be used to supplement any benefits received from government programs such as Supplemental Security (SSI) and Medicaid. If drafted properly, a Third Party Special Needs Trust will allow the beneficiary to continue to receive such government benefits while simultaneously receiving funds from the trust.
Another important benefit is that the parent(s) will be able to handpick a Trustee who will be responsible for overseeing the money in the trust if mom and dad can no longer do. This allows the parents to choose someone who will have their child’s best interest at heart and will not be easily persuaded to give the adult child money in such a way that would be detrimental to his or her future. If there is not a family member or loved one who the parents feel is capable of serving in such a role, a professional trustee may also be chosen.
It’s important to note that a Third Party Special Needs Trust is a complex legal document that should be created with the assistance of a qualified Special Needs Planning Attorney. There are specific laws that must be followed when setting up the trust, and the attorney will need to educate the family on how to administer the trust properly, so as not to jeopardize public benefits.
What is most important to know is that there are options available to protect the resources a parent wants to leave behind for their adult child’s future. A Third Party Special Needs Trust is one such tool that can help to provide stability, safety and peace of mind.
If you have questions about setting up a Third Party Special Needs Trust for a loved one with Bipolar Disorder, please feel free to contact the Virginia Special Needs Planning Law firm of Sheri R. Abrams at (571) 328-5795 to schedule an appointment..