When you begin the estate planning process, it is important to consider any special circumstances in your life that may need to be factored into your estate planning. One of the most common special circumstances arises when you have child with special needs. If you have a child with special needs, you may need to be strategic with your estate plan and structure it in a way that will continue to provide for your child after you are gone.
Providing for Children with Special Needs
One way you can help provide for a child with special needs after you are gone is by creating a Special Needs Trust. This option is preferred by many families because it allows the child to remain eligible for public assistance programs such as Medicaid and Supplemental Security Income (SSI). These programs tend to have strict eligibility requirements that are based on the financial need of the child. Often when families leave large inheritance to a child with special needs, the child will no longer meet the eligibility requirements for Medicaid and SSI. However, a Special Needs Trust allows a way around this problem.
Third-Party Special Needs Trust
There are several types of Special Needs Trusts. The most common type is a Third-Party Special Needs Trust. Generally, assets held in this type of trust do not impact your child’s eligibility for public assistance programs. These trusts are designed to cover any financial needs that are not covered by public benefits programs like Medicaid or SSI. Typically, assets from these trusts come from you as the parent and are managed by a designated trustee. The assets are not given directly to the beneficiary of the trust (your child) and cannot be used for housing or food expenses. Instead, a trustee will be in charge of distributing the trust assets to pay for things like out-of-pocket medical expenses, caretakers, education, or costs of transportation.
First-Party Special Needs Trust
Another commonly used type of Special Needs Trust is a First-Party Special Needs Trust. Often, these trusts are established when a child with special needs receives a large sum of money from an outside source, such as a settlement from a personal injury suit or proceeds from winning the lottery. First-Party Special Needs Trusts operate very similarly to Third-Party Special Needs Trusts. However, there is one main difference: If your child received government benefits during their lifetime, with a First-Party Trust, the government may be able to claim an interest in trust assets after your child dies .
Deciding whether a Special Needs Trust fits the needs of your family is something many consider when planning their estate. The attorneys at Tessmer Law Firm P.L.L.C. are experienced in Estate Planning and can assist you in making certain you have all possible scenarios covered. Our practice includes sophisticated Estate Planning issues such as high-asset estates, guardianship, conservatorship and establishing special needs trusts. Call 210-368-9708 today to schedule your confidential consultation.