Planning for the future takes on a heightened importance if you are the parent of a child with special needs. As a parent, you undoubtedly want to provide for your child, both while you are here and after you are gone. Doing so, however, takes careful planning when your child has special needs because consideration must be given to your child’s continued eligibility for state and federal assistance programs. The key to ensuring that your child will benefit from both your assets and the assistance of programs such as Medicaid and Supplemental Security Insurance (SSI) is to work with a special needs planning lawyer to include a special needs planning component in your overall estate plan.
The Cost of Raising a Child
No parent wants to think of their child in terms of how much it costs to support and maintain the child; however, the reality is that the average cost of raising any child is high. If you are the parent of a child with special needs, the cost of raising your child will likely be significantly higher than average. For example, you may incur ongoing expenses for things such as:
- Specialized equipment
- Prescription medication
- Caregivers
- Therapists (occupational, physical, speech etc.)
- Doctor visits
- Surgeries
If your child has special needs, the odds are good that he/she will continue to require specialized care as an adult and that care will continue to be expensive. Although your legal obligation to support your child may end when he/she reaches the age of majority, your desire to continue to contribute to your child’s care and maintenance will likely continue. While your child may qualify for assistance from various state and/or federal assistance programs, such as Supplemental Security Income (SSI), Supplemental Nutritional Assistance Program (SNAP – food stamps), Medicaid, or Section 8 housing, you will probably want to supplement that assistance to ensure that your child’s quality of life is the best possible.
The Problem with Gifting to a Beneficiary with Special Needs
The desire to provide continued financial support to your adult child with special needs is both understandable and admirable. As a general rule, providing financially for an adult child and/or gifting assets to an adult child does not present a problem; however, in the case of a child with special needs, doing either can actually cause more harm than good. If your child depends on assistance from programs such as SSI, Food Stamps, or Medicaid, gifting anything of value to your child could threaten his/her eligibility for benefits from these programs. Many assistance programs have both an income and an asset test that applicants/recipients must pass to gain or retain eligibility. Consequently, an applicant/recipient cannot earn a significant income nor own valuable assets or benefits could be lost. Gifting anything to your child, therefore, could cause your child to lose eligibility for much needed assistance programs.
How Can a Special Needs Trust Help?
A special needs trust, also referred to as a “supplemental” needs trust, is a specialized irrevocable living trust that allows you to continue to provide for your child without jeopardizing his/her eligibility for assistance. For a trust to be recognized as a special needs trust by SSI, Medicaid, or other assistance programs, very specific language must be used and the trust must be drafted properly, which is one of the many reasons it is in your best interest to have a Fargo special needs planning lawyer assist you. Once created, you can transfer assets into the trust to be used to supplement the care provided to your child by programs such as SSI and Medicaid. In addition, other family members can contribute to the trust through direct gifts or in their estate plan and the trust may continue to provide supplemental care for your child long after you are gone.
Contact a Special Needs Planning Lawyer
Please plan to join us for one of our FREE estate planning seminars. If you have questions or concerns regarding special needs planning in the State of Illinois, contact the experienced special needs planning lawyers at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.
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