When you have a child with special needs, you may rely on certain government benefits to assist with care and expenses. Even if you do not use these benefits currently, you need to keep them in mind as you develop your estate plan. You want to be sure that you do not strip your child of possible government benefits when you leave him or her an inheritance.
According to Forbes, it is common for parents with special needs children to struggle when creating an estate plan due to the lack of knowing what the future holds. There is so much uncertainty as to what your child’s needs will be and what benefits will be available to him or her. It is essential to create your estate plan with an eye towards flexibility.
Relying on a sibling
You can leave assets to your other children under the condition that they take care of your special needs child. This will then leave your special needs child with few assets that could affect government benefits.
However, this is difficult to make into a legally binding agreement, and there are many issues that could occur with this setup. There could be problems with the sibling not wanting to share his or her inheritance. If the sibling goes through a divorce or bankruptcy, there is the potential for loss of assets from the inheritance. It is almost always better to leave assets directly to your special needs child.
Creating a special needs trust
The most favorable solution that most special needs parents find to prevent any issues with future government benefits is to create a special needs trust. The trust requires careful drafting to ensure it will not affect benefit eligibility. You should view it as a supplemental form of income and not the main source of your child’s income. This leaves room for the benefits to provide basic care.