When you have a child who is disabled and receives government assistance, your estate planning needs are especially sensitive.  You can’t leave a bequest outright to your child because the result would be that he or she would lose their government benefits, at least until their inheritance was used up.  This scenario would likely leave your child worse off than they were prior to receiving the inheritance.

 How?  Because, now, while you’re living, he or she likely relies on government assistance like SSI or Medicaid to cover bare-bones living expenses and medical care, while you provide all kinds of “extras” that enrich his or her life.  Things that range from special toiletries and favorite foods to special outings, educational programs and experiences, travels, and myriad other things that would be sorely missed if you were absent from the life of your child.

If you were to pass away and leave money to your disabled child in the form of an outright bequest, your child would lose his or her benefits and would have to use the inheritance they received from you to pay for living expenses and medical care.  Once the inheritance was used up, they would once again be eligible for government assistance.  At that point, though, you would no longer be there to provide all the “extras”, and the inheritance would be gone, so your child would be left with only the basic care afforded by Medicaid or SSI.  Not a very enriching life.

The good news is that with careful estate planning, your disabled child can continue to receive his or her government benefits and enjoy access to the special “extras” that you provide, even after you’re gone. 

This can be done with a properly established Special Needs Trust. This is a type of irrevocable trust that can only be used to provide supplemental care above and beyond what’s provided by Medicaid or SSI.  Even if you’re not necessarily wealthy, you may be able to use a life insurance policy to fund this type of trust.

There are very specific rules that have to be followed in forming a Special Needs Trust, so it is essential that you have an attorney with experience and training in this area of estate planning law help you.  Our office is ready to help you establish a customized plan to provide for your special needs child.  Please call us for an appointment – (336) 547-9999.

The Law Offices Of Cheryl David is a member of the American Academy of Estate Planning Attorneys.

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