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Estate Planning for Special Needs

July 2015

Families with special needs children who are receiving public benefits, or may receive such benefits in the future, create unique challenges for estate planners. Traditionally, the thought was that parents should exclude their special needs children from receiving any inheritance so as to allow the child to retain his or her public benefits. The plan put in place gives the share the special needs child would have received to another family member, who in turn would use this extra amount for the benefit of the special needs child. This plan has initial appeal in that it is straightforward and easy to understand. However, that is where the appeal stops.


The traditional plan fails on a number of different levels. First, what if the family member receiving the inheritance encounters creditor problems? The creditors of this family member could consume the inheritance before it ever gets to the special needs child. Second, what if the recipient of the inheritance passes away prior to doing any further planning? What will become of this inheritance intended for the special needs child? Third, what happens if the individual holding the inheritance for the special needs child needs long term care? The inheritance now becomes subject to the cost of care for the recipient. In any of these scenarios, or countless other scenarios, the special needs child does not receive the intended benefit the now deceased parents were intending.

Families with special needs children should consider the use of special needs trusts to address the concerns noted above. A special needs trust is a trust created by federal statutes, which does not count as an asset belonging to the special needs child. In other words, the inheritance which might otherwise be given to another family member for the benefit of the special needs child can instead be placed in a special needs trust specifically for the child. The trust can pay for the many things not covered by public benefit programs, such as vacations, educational opportunities and personal possessions. Numerous other items can also be purchased by the trust.

Public benefit programs tend to keep recipients at a poverty level existence. Given the pressure on funding for such programs, families need to look more toward a combination of public benefits and private funding to help elevate the standard of living for these special needs children. A special needs trust can provide this private funding while maintaining the public benefits, which will then elevate the lifestyle of the special needs child. That is the end result most parents seek.


Attorney Dan Walsh


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As always, seek the advice of a qualified legal professional regarding any legal issues you may have. You should not disregard professional advice or refrain from seeking professional advice because of anything contained in this article. The information contained herein is general and educational in nature. Because each case is different and each legal analysis is customized for individual clients, the information contained in this article should never be used to determine your legal rights.




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