How To Plan For A Special Needs Child
If you have a special needs child, then one of the hardest things to think about is what will happen to your child when you pass away. Luckily, there are ways you can plan for the well-being of your child should something ever happen to you.
Address the issue in your trust. You will want to approach your trust differently than other people and plan accordingly. This may mean you leave property or funds to your child held in trust. One thing to be aware of is that leaving money to your special needs child could have unintended consequences. If your child qualifies for government assistance, such as social security income (SSI) or Medi-Cal (i.e., Medicaid in California), then an inheritance could disqualify them from those benefits. Luckily, there are ways to plan around that.
Consider a special needs trust.
A special needs trust can allow your property to be used for the benefit of your child, without it being considered their property for the purposes of SSI and Medi-Cal.
There are two types:
A third-party special needs trust is a trust that allows an individual, e.g., you, to place property into a trust to benefit another person, i.e. your child. While the trust, not your child, owns the property, the property is specifically used to benefit your child.
A first-party special needs trust is a trust that is funded with your child’s own property. In this type of trust, typically a legal guardian or agent under a power of attorney will place funds owned by the special needs child into a trust on his or her behalf. This technically transfers ownership of the property to the trust but still allows the property to be used to benefit the child. One caveat to this type of trust is that when the special needs child passes away, any money remaining in the trust will go to repay Medi-Cal for medical services first. After Medi-Cal is repaid, any money remaining can be distributed to the family.
In many cases, once a special needs child turns 18, he or she will need to have a guardian appointed to continue caring for the individual. This guardian could be you or your spouse or could be someone else entirely. You should also consider appointing a standby guardian. This person will step in as guardian should the current guardian be unable or unwilling to serve. By appointing a standby guardian, you ensure no lapse in care for your child should something happen to you.
If you have a special needs family member and would like assistance in planning for their future well-being, then give us a call today at (858) 792-3444. Or email us with your interest in more information on how to protect your child.