Question: My attorney suggested a certain type of trust should be implemented for my special needs child. I’m not looking to complicate things and would prefer to leave my assets to my other children to take care of this child.
Answer: When we hear the term “special needs,” we often think of children, but a family may have a young adult or older relative with a physical or mental disability that falls under the umbrella of special needs. Individuals with special needs may qualify for government benefits, including Supplemental Security Income (SSI) and Medicaid. It is often important to use your assets to provide special needs beneficiaries with as much financial security as possible. But you don’t want to leave these special needs beneficiaries with your assets in such a way that may jeopardize their eligibility for needed government benefits.
If you have a child with special needs, relying on your other children to take care of their sibling financially after your death as you do during your life is a risky proposition. Your children may care for their sibling immensely, but there are a number of potential pitfalls.
- If you leave extra money to your other kids to care for their sibling with special needs, all kinds of things can happen. First, that money legally belongs to your other kids, even if you leave explicit instructions that they are to use it to care for their sibling. They may choose to use it for their own benefit.
- Even if you trust that your other kids would never misappropriate that money, they might still lose it. Because the funds are legally theirs, they could be reached by a judgment creditor or by a divorcing spouse who may be entitled to a portion of it.
- There is also the possibility that the child to whom you leave the money with will die before the child with special needs. If that happens, his or her heirs will get the money—and might not use it as you intended. Likewise, the child who inherits the money could become incapacitated or disabled themselves, and need to “spend down” those assets to qualify for benefits they need.
Comment: A trust can solve many problems. While there may be a seemingly more simple solution, simple isn’t always better.
As always, if you have any questions or would like to learn more, please contact Steve Shane at firstname.lastname@example.org or .
ABOUT STEVE SHANE
Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.
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