Like all parents, you want nothing but great things for your child. Of course, if your child has special needs, you likely face some unique challenges. Fortunately, if your son or daughter qualifies for needs-based government benefits, you can be certain he or she can pay for living expenses and medical care.
Needs-based government programs, such as Medicaid and Supplemental Security Income, require beneficiaries to meet certain financial requirements. In general terms, if your child has too many assets, he or she may not qualify for needs-based assistance. Furthermore, your son or daughter may only use needs-based funds for certain expenses. Setting up a special-needs trust may be an effective way to improve your child’s quality of life.
Special-needs trusts
If you give money directly to your son or daughter, you may jeopardize his or her ability to receive some types of government assistance. As such, if you want to provide for your child financially, you may need to do some careful estate planning. With a special-needs trust, instead of giving money, property or other assets to your child, you place wealth inside a trust. Your loved one can then use disbursements from the trust to pay for items that make life better, even if government assistance excludes those purchases.
Financial management
Special-needs trusts are often a good tool for helping a child better manage finances. When you create one of these trusts, you name a trustee to oversee expenses. Before making a disbursement, the trustee carefully considers its purpose. He or she also can research whether the disbursement may negatively affect your child’s ability to continue to receive needs-based government assistance.
Because needs-based government programs pay important expenses, you want your disabled child to take full advantage of them. You also want your son or daughter to have a good life. Fortunately, with the right estate planning, you can likely improve your child’s quality of life without harming his or her eligibility for essential benefits.