When your child has a disability, it may take more to provide for him or her after your death than it might otherwise. Many individuals with special needs use Medicare, Supplemental Security Income or other types of public benefits. However, if you leave your child too much in a will, it may put him or her over the threshold needed to qualify for these assistance programs.
A way to avoid having assets you leave your child disqualify him or her from receiving public benefits is to place assets intended for your child with a disability in a special needs trust.
How the special needs trust works
Any assets your son or daughter owns become subject to means-testing. Before your child may use many public assistance programs, he or she must prove that there is a genuine need for it. When you place assets in a special needs trust, those assets do not come into play during means-testing. Thus, they allow you to preserve your child’s public benefits eligibility while still giving you a way to leave something behind for him or her.
Types of special needs trusts
Special needs trusts come in two formats: first- and third-party special needs trusts. Most parents trying to preserve public benefits eligibility choose the third-party special needs trust. With this type of trust, any remaining benefits may go to someone else once your child passes away. Any assets remaining in a first-party special needs trust typically have to go toward reimbursing public programs.
Please contact our law firm for more about establishing and funding a special needs trust.