Do I Need to Include Special Needs Planning in My Estate Plan?

The need for careful and consistent estate planning takes on a heightened importance if you are the parent of a child with special needs.  Your child with special needs may grow up to live a very independent life; however, you may still need, or simply want, to continue to provide financial support to your adult child.  Providing that financial support can be problematic though because gifting assets directly to an adult with special needs could jeopardize his/her eligibility for critical assistance programs such as Medicaid and Supplemental Security Income (SSI). A Murfreesboro estate planning attorney at Bennett | Michael | Hornsby explains how the inclusion of a special needs planning component in your comprehensive estate plan allows you to provide your child with financial support without impacting eligibility for assistance programs.

Providing Financial Support to Your Child with Special Needs: What You Need to Know

Until your child reaches adulthood, you have a legal (and moral) obligation to provide for your child’s support and maintenance. While some parents stop providing financial support to their children when they reach adulthood, others prefer to continue to help their adult children financially to varying degrees. Fortunately, many children with special needs can find gainful employment, care for themselves, and live independently as adults. They may, however, continue to rely on assistance programs and/or the financial support of parents and other family members for their entire adult life. You must be careful when providing that financial support to ensure that doing so does not interfere with your child’s eligibility for assistance programs such as Medicaid or SSI.

When your child reaches the age of majority, the law considers your child to be a legal adult without regard to physical, mental, or emotional abilities or disabilities. As such, your adult child’s eligibility for state and federal assistance programs will be determined, in part, by his/her income and the value of assets your child owns. Consequently, a direct gift of cash or other valuable assets made to your child could easily disqualify your child for critical assistance.  The good news is that special needs planning within your overall estate plan allows you to continue to provide for your child without jeopardizing his/her eligibility for assistance. 

What Is Involved in Special Needs Planning?

Special needs planning utilizes estate planning tools and strategies aimed at providing a one-time gift and/or ongoing financial assistance to your adult child without threatening his/her eligibility for much-needed government assistance programs.

A popular special needs planning tool is a special needs trust (SNT), also referred to as a supplemental needs trust. A SNT is a specialized irrevocable living trust that can be used to “supplement” the care and maintenance provided by government assistance programs. For instance, funds held in a SNT might be used to purchase a vehicle for the beneficiary (your child), to pay for swimming lessons, or to pay for a vacation for the beneficiary. 

A properly drafted SNT lets a parent (and others) contribute money or assets to help financially support an adult with special needs while ensuring that the trust assets will not be considered when determining eligibility for state and federal assistance programs. A SNT can be funded using assets contributed by a third party (parent, grandparent, or others) or using the beneficiary’s own assets. When the beneficiary’s own assets are used, referred to as a first party SNT, it is usually because of a situation wherein the beneficiary inherited money or received a settlement in a lawsuit. Not only does a special needs trust provide a way for you to continue providing financial support to your adult child with special needs, but a SNT can remain intact and keep on contributing to your child’s care and maintenance after you pass away, giving you valuable peace of mind.

Contact a Murfreesboro Estate Planning Attorney

If you have additional questions or concerns about how to include special needs planning in your estate plan, consult with an experienced Murfreesboro estate planning attorney at Bennett | Michael | Hornsby as soon as possible. Contact the team today by calling 615-898-1560 to schedule your free appointment.


Stan Bennett