Inexperienced attorneys and financial planners have a really bad habit of telling parents of children with special needs that they need to write their child out of their estate plan in order to maintain their child’s eligibility for government benefits. While this tactic would accomplish the goal of preserving government benefits, it is the worst way to help a child with special needs.
Both Supplemental Security Income (SSI) and Medicaid are means-tested programs with very strict income and asset limits. This makes parents concerned about leaving their child an inheritance. Rightfully so! But, writing a child out of an estate plan is not the right solution to help a child with special needs.
While SSI may provide a small cash benefit to your child, it is not nearly enough to support a person with special needs for their lifetime. The added benefit of an inheritance that is placed in a Special Needs Trust can fill the gap and provide a way for them to maintain their quality of life. Further, government benefits are subject to the whims of Congress and the President, so the benefits that may provide for your child today could be eliminated or severely cut back in the future.
Rather than disinheriting a child with special needs, parents should almost always establish a Special Needs Trust. When properly drafted by a qualified special needs planning attorney, the Special Needs Trust will hold the child’s inheritance so that it can be used to supplement their government benefits.
Special Needs Trusts can also receive life insurance payouts so that even if the family does not have a lot of liquid assets they can still provide for their child with special needs when they pass away. Disabled individuals who don’t even need government benefits often benefit from a Special Needs Trust because by having a Trustee manage the assets it provides additional oversight of spending and protects the child from financial abuse.
If you’ve received bad advice about disinheriting your child and created an estate plan that reflects that choice, we invite you to contact us today to discuss better options. To schedule an appointment , please call the Fairfax Virginia Law Office of Sheri R. Abrams at (571) 328-5795..