When it comes to estate planning, many parents find there are a number of considerations they will need to take in order to make certain their children are being taken care of. For parents who have a child with disabilities, the process can be even more daunting. Most children with special needs require a very specific type of care that only their parents have been truly familiar with for the majority of the child’s life. Most adults fear that their child with a disability will not receive the care that they require once they pass, which is why proper estate planning is so important.
Inheritances
One of the biggest questions that parents of children with disabilities tend to have revolves around inheritances. While an inheritance is a natural part of estate planning, there are a few different reasons that some parents may not want to leave their child with a disability with a standard inheritance. Some worry about others taking that money from their child, while others may want their children to qualify for Medicaid and other specific benefit programs. However, in order to qualify for Medicaid, special needs children cannot have more than $2,000 in their name.
Another approach that some parents take is to disinherit their special needs child and instead give the money to a family member who promises to care for that child. While one solution, it has huge pitfalls and is a solution that needs to be thought out in great detail first.
Special Needs Trusts
The good news for parents with children with a disability is that there are actually trusts available now that are specifically meant for families in this particular situation. This special type of Trust is created as part of your estate plan and can actually dictate that the money cannot be used for necessities like clothing, medication, food, and shelter so that your child will still qualify for the different government programs that they may need down the line. The money can, however, be used for programs and amenities that don’t fall within these government programs such as entertainment, travel, and recreation.
With these Trusts, you can write a specific letter of intent to either a caregiver or even a facility or group home, so it is clearly detailed how the money is meant to be utilized. There will also need to be a trustee that is responsible for overseeing the money in the Trust and of course, you will need to make financial preparations to make certain the trust has been funded.
If your child inherits without a trust, it still may be possible for a disabled individual under the age of 65 to remain eligible for Medicaid even if they get a direct inheritance or similar financial gain. This is allowed only if the gain is placed is a qualifying Trust, also known as a “payback” Trust. This trust will pay back the state and federal government for any Medicaid benefits that were paid on the child’s behalf before any family will inherit.
While no parent ever wants to think about their child with a disability being in a position where they need to survive without them, it is important to plan ahead for these types of issues with proper estate planning. Here at Your Legacy Legal Care, we specialize in helping families find the best legal solution needed to make sure their children are getting the financial assistance they require. If you need help getting started, contact Your Legacy Legal Care at (281) 885-8826 to schedule a consultation and learn more about how these financial solutions may help you and your family.
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