By: Kevin Shields

How Does Having an Adult Child with Special Needs Affect Estate Planning?

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It’s hard enough to consider the fact that someday we will no longer be part of our loved ones’ lives. Planning for that future can be emotionally difficult. But no matter what, it’s important to plan ahead. It’s even more important when there is an adult child with special needs who will need security and protection after your passing, especially if lifetime supervision or guardianship is required. Here are some of the considerations that need to be addressed. It’s in your best interests to work with not just an estate planning attorney, but one that has experience with special needs planning. That’s because a poorly planned estate could cause the child to become ineligible for benefits that could aid them throughout their life.

When Should I Begin Planning My Estate Regarding My Adult Child with Special Needs?

It’s never too soon. Much as we all plan to live as long as possible, that doesn’t always happen. Even if the person with special needs is still a minor, planning ahead to their adult years is advised, so you’ll have the peace of mind that comes with knowing you’ve taken care of them.

Letting it go until later can lead to a situation where the courts will be in charge of determining the best for the child, not you.

What Are Some Tools Available to Protect My Adult Child with Special Needs?

There are many, and the value of each one depends on the specific needs of your child, the size of your estate, and whether or not there are younger family members who may be willing to step in to care for the child when you’re no longer able.

Trusts

Trusts need to be approached with caution, because beneficiaries of certain types of trusts are generally not eligible to receive Social Security Income (SSI) or Medicaid. But they’re valuable tools in terms of protecting the beneficiary from creditors or scammers while making sure they have the income and guardianship they need. 

Specific special needs trusts can be structured to allow the beneficiary to receive SSI or Medicaid.

  • Self-settled special needs trust. This type of trust is established by a parent, grandparent, legal guardian, or the court to allow the special needs person to directly use the assets of the trust (often an inheritance or settlement from a lawsuit) throughout their lifetime. The trust must be established before they turn 65. On their death, any remaining funds go first to reimburse any Medicaid earned by the special needs person. 
  • Third-party special needs trust. This type of trust is often used in estate planning that involves special needs beneficiaries as it’s the clearest way to avoid losing access to SSI or Medicaid. In this trust, people (often family members or other loved ones) set up a trust that can’t be accessed directly by the beneficiary, but is overseen by a trustee who is responsible for disbursing funds to the beneficiary. The people setting up the trust can specify how disbursements should be handled. 

Other tactics

Trusts are among the most common ways to protect an adult with special needs, but there are other options.

  • Disinheritance. This involves leaving the special needs adult out of the will and giving the estate’s assets to another sibling or relative who is appointed to care for the special needs person. However, this is risky in that after your death, the relative may choose not to care for the special needs person (which is legal), or they may run into financial or legal troubles that cause them to need the assets themselves, such as in a contentious divorce.
  • A trust that doesn’t directly benefit the special needs adult. A trust known as a supplemental needs trust can be used to pay for things other than medical care, food, clothing, or shelter–items covered by SSI and Medicaid. They can be used for nearly anything not covered by SSI or Medicaid. 

What Do I Need to Know about Planning My Estate to Protect My Adult Child with Special Needs?

The first step is having a full understanding of your child’s needs and health going forward. Talk to the child’s doctor, specialist, or therapist about what the long-term prognosis is. That should include a frank discussion of whether or not the child will be able to support themself and live alone in the future, what their quality of life is likely to be, if they’ll be capable of handling their own finances or need support for that, and what, if any, types of medical support they’ll need.

Identifying these key concerns can help determine if your estate can provide for the child going forward or if they’ll need help from various social services or government agencies. The tactics reviewed above are commonly used ways to protect your special needs offspring. Understanding the nuances of their needs and your wishes guides our recommendations.

What Should I Do if I Need to Plan for My Special Needs Adult Child’s Future?

Call us at 832-422-7333 for a free, no-obligation discovery call. We have years of experience in estate planning with an emphasis on making sure your adult child with special needs is provided for. We know that you want the best for your child, and you want to be sure they’ll be cared for and safe in your absence. We understand the various options that you can use to make sure that happens, and we’ll help you determine which options are best for you and your child.