As the parent of a child with disabilities, you have to be extra careful with your estate planning. Leaving your child as the beneficiary of your estate could impact his or her ability to get financial and medical assistance from the government in the future. If you have a child with special needs, here is what you need to know about planning for his or her future.
What Impact Could Your Estate Planning Have on Your Child's Future?
If your child needs financial or medical government benefits, such as Medicaid, the assets you leave him or her could have a bearing on whether or not your child qualifies for assistance. Some benefits programs have strict financial guidelines that must be met for eligibility. If your child's inheritance exceeds the guidelines, benefits could be stopped or reduced.
Assets, such as a home or car, will likely not have an impact on your child's eligibility for benefits. However, cash and stocks could. Therefore, it is important that you take steps to protect your child's rights to receive assistance in the future.
What Can You Do?
One of the most commonly used methods in estate planning by families with children who have special needs is a trust. Instead of leaving your assets to your child, you would place them in the trust. Although the assets will be used to provide for your child, they will not count as part of his or her income because they are in the trust.
After establishing the trust, you can elect to select a trustee to oversee it right now or administer it yourself. If you choose to be the trustee now, you need to ensure that someone is selected to take over the responsibilities of managing the trust once you have died or after you have become unable to handle the duties yourself.
Are There Restrictions?
The special needs trust does have some restrictions that you need to keep in mind. For instance, there are restrictions on how the funds can be spent. For instance, any cash that is given directly to your child from the trust can be counted as income. Depending on the amount given, your child's eligibility for benefits could be impacted.
There could also be an impact on his or her eligibility for benefits when funds from the trust are used to pay living expenses, such as the rent or utilities. In reviewing your child's eligibility, the government could choose to consider part of the funds used as income.
Your attorney can help with taking measures to protect your child's future and inheritance. To learn more, contact services like MARKHOFF.