How Parents Can Provide Financially for a Special Needs Child in This Uncertain Economy

Have you ever wondered what would happen to your special needs loved one if you passed away tomorrow? Have you done everything possible to ensure that your loved one with special needs will maintain his or her government benefits and receive an inheritance from you? For many parents with special needs children, whether the children are minors or adults, these questions linger in the back of their minds. Estate planning is always important to do, however, when one of our beneficiaries is a special needs loved one, the planning becomes critical.

When a parent leaves an inheritance over $2,000 to an individual with special needs, then that inheritance is actually a gift to the government because it eliminates that child’s qualification for government benefits. Parents and attorneys armed with the basic knowledge, that you cannot have assets in excess of $2,000 and still qualify for government benefits, often think that the only reliable method to protect a special needs loved one is to disinherit them. They believe, or are counseled, that leaving their inheritance to another child or individual who will morally take care of their special needs loved one solves the problem. In most cases, however, this does not solve the problem, but only makes it worse. Leaving everything to your daughter “Susie” if “Johnny” has special needs, would allow Susie’s creditors to attach Johnny’s money. In addition, if Susie is having a bad year financially, there is nothing to stop her from using the money for herself. Furthermore, if Susie passes away, this money would go on to her beneficiaries and not to Johnny.

Parents can solve all of these problems by creating a Special Needs Trust. A properly drafted Special Needs Trust allows the special needs individual to maintain government benefits and to use the inheritance for everything but food and shelter. The Special Needs Trust is the perfect solution and the only reliable method to make sure that your inheritance benefits your child with special needs. The Special Needs Trust keeps assets in a form that will be available for your child and allows your child to maintain and receive government benefits.

A properly drafted Special Needs Trust will specify that funds from the Trust only supplement and do not replace the government benefits. These funds can be used for extra medical care, personal items, such as t.v.s, radios, computers, vacations, companionship, advocates or any other item or service to enhance your child’s self-esteem and situation, anything except food and shelter. With respect to shelter, your child can use the money to purchase a home, but cannot use the money for rent.

Oftentimes, parents who have minor or adult children with Cerebral Palsy wonder what the future will hold for their special loved one. Will they be productive in society, will they need governmental benefits, who will take care of them and be responsible for their financial needs? We have developed a very unique approach to address these questions – the Wait and See Special Needs Trust. A Special Needs Trust would be set up as a vessel for an inheritance to go into, however, a decision would be made by the trustee at the time that the parents pass away whether or not this individual is likely to need government benefits in the future. Specifically the Wait and See Trust requires the trustee to test and have your special needs loved one evaluated educationally, cognitively, rehabilitatively, physically and emotionally. These evaluations also include, but are not limited to, a physical and psychological evaluation, an evaluation of education and training programs, work opportunities and earnings, recreation, leisure time, and social needs. If he or she is not likely to need government benefits, then the Special Needs Trust would not be used and the assets can then be used for basic needs as well as special needs. The benefit of this, of course, is that we have the advantage of planning for an unknown future.

As a parent, not only do you want to provide an inheritance for you child or your children, but when you have a child with special needs, you often are the only one who knows their medical needs i.e. doctors, prescriptions, as well as the child’s likes and dislikes. The Special Needs Trust incorporates a Letter of Guidance that addresses all of the information that caregivers so vitally need.

While government agencies recognize Special Needs Trusts, there are strict rules and it is critical that you work with an experienced special needs attorney to draft the Trust. We have reviewed countless Special Needs Trusts that do not comply with Social Security Insurance and Medicaid rules. One wrong word or phrase can make the difference between an inheritance that benefits your child and one that causes your child to lose the many services, assistance and benefits available.

We know that a parent’s greatest worry is what will happen after I am gone. One parent shares his experience as follows:

It had been in the back of my mind for years, soon after I found out my son had this lifelong disability. What would the future hold for him when I wasn’t there anymore to be his advocate, friend and supporter? It was both a big and little worry. Big, because it gave me a hole in my gut whenever the question crept in. And little, in the sense that I tried not to think about it. I’d think: I’ll worry about that tomorrow, next week, when he’s older, when I’m older.

Of course, I’ve done things to prepare for that future he’s going to have without me, things like teaching him how to wash clothes and shop. But should I write a Will? Make an estate plan? No, for years, I dodged that one totally.

But you know, it’s funny. Now that we’re finished setting up our estate and only need periodically to review our plans, I feel like an enormous burden has been lifted up from me. The big, black, scary shadow is gone. Well, not totally gone, I suppose. I still worry about Samuel, what will happen to him in his life. I guess every parent does that. But now I don’t worry in the same way. I know I’ve done all I can do for that part of his future, something that was extremely important to do, and I am very relieved. Now I feel like we can deal fully with the present day and see to the other things that need to be done to prepare our child for life as an adult. And that’s very exciting.

Parents of special needs children can solve their greatest worry with a properly drafted Special Needs Trust. If you would like more information on Special Needs Trusts, you can contact The Center for Special Needs Planning at (248) 213-9514 or visit our website at

Source: Danielle Mayoras and Don Rosenberg, attorneys from The Center for Special Needs Planning

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