Bridgewater Special Needs Estate Planning Lawyer
If you have a child or a family member with a disability, you may worry about what will happen to them after you’re gone. Maybe you want to provide for them financially, but you’re unsure how to plan for their future needs. You might have concerns about who will manage their affairs if they can’t do so themselves.
A special needs estate planning firm can provide solutions to ensure your loved one always receives the care they need. This type of planning allows you to work towards the long-term well-being of loved ones with disabilities after you’re no longer able to support or advocate for them directly. For parents of children with special needs, it involves thoughtful coordination of legal protections, financial resources, and personalized care arrangements both for today and the years ahead.
If you have questions or concerns about special needs estate planning, the Van Dyck Law Group can provide the answers that you need. Please contact us at your convenience for a consultation.
Bridgewater Special Needs Estate Planning Attorney Can Help You Plan for the Future You Deserve
Your special needs estate planning attorney will review the options that best fit your family’s situation and answer your questions. Once you’ve decided how to proceed, they will draw up the appropriate paperwork and guide you through every step.
Here are some of the options your lawyer will likely discuss in order to give you a secure future you’ve always dreamed about:
Support Trusts
Support Trusts are designed to provide for a beneficiary’s basic needs, including housing, food, clothing, healthcare, and education. A trustee will manage the trust and make distributions for these purposes.
However, because the trust covers essential living expenses, it can disqualify the beneficiary from receiving government benefits such as Supplemental Security Income (SSI) or Medicaid. If your child is expected to need SSI or Medicaid in the future, a Support Trust is likely not the appropriate option.
Special Needs Trusts
In many situations, a Special Needs Trust offers the most practical solution to support a child with a disability. It allows assets to be managed on the child’s behalf without jeopardizing their access to essential public benefits such as Medicaid or Supplemental Security Income.
There are two different types of Special Needs Trusts:
- Third-Party Special Needs Trust: This type of trust is usually established through a will or living trust and funded by the parents’ or other family members’ assets.
- First-Party or Self-Settled Special Needs Trust: Funded with the child’s own assets. This type of trust often results from a legal settlement or inheritance. A parent, grandparent, or legal guardian typically sets it up. Any remaining funds after the child’s death must be used to reimburse the state for public benefits the child received.
First-Party Special Needs Trust Planning
Many people with disabilities will eventually need Medicaid, SSI, or both. Some are unable to work at all, while others may work for a few years, but have to stop as their condition progresses. For this reason, they may not have the income to cover essential needs, including medical care.
Medicaid is a government health insurance program for adults with low income/assets, but the income threshold to qualify is relatively low. Unfortunately, many people fall into the gap between qualifying for Medicaid and being able to afford private health insurance and medical bills.
SSI is a separate program that provides payments to individuals with disabilities or those who are elderly and have limited income or assets. Again, the income level that allows a person to qualify for SSI is fairly low.
Because of these income requirements, many parents have concerns about how to manage estate planning for special needs children. This can be a particularly significant concern if the child is expected to receive a sizable inheritance or settlement.
When set up correctly, a first-party special needs trust can provide a good solution in these situations.
Setting Up a First-Party Special Needs Trust
An individual with special needs may lose eligibility for Supplemental Security Income (SSI) or Medicaid if they have more than $2,000 in assets under their name (The exact amount is subject to change over time, but the income limit is generally low).
However, the disabled person can preserve their eligibility by placing the excess funds into a first-party special needs trust, which is specifically designed to meet this requirement.
This type of trust must be established by the individual with special needs or by a parent, grandparent, legal guardian, or the court. The funds in the trust can be used during the beneficiary’s lifetime to enhance their quality of life.
How Can a Special Needs Trust Be Used?
Rather than providing for basic living needs, this type of trust is used to enhance the beneficiary’s quality of life. Common uses include funding hobbies, recreational activities, therapy, camps, and other non-essential but enriching experiences. While the trust is generally reserved for these supplemental items, the trustee may choose to cover other expenses if doing so serves the beneficiary’s overall well-being.
The trust may be used for certain out-of-pocket medical or dental expenses, adaptive equipment, accessible transportation (such as a wheelchair van), specialized education or vocational training, and home modifications. In some situations, it can even be used to purchase a home, but specific requirements must be followed for real estate purchases.
If the trust has sufficient assets, the trustee may also approve purchases such as electronics, home appliances, computers, travel, entertainment, or even pay for a personal companion. These types of expenditures are often referred to as quality-of-life improvements, as they help foster independence, dignity, and personal fulfillment.
It’s important to note that only the trust’s beneficiary should benefit from its funds
Other Options to Consider in Providing for a Child with Special Needs
In some cases, a parent or guardian may feel that setting up a trust is too complicated or expensive. They may not have a suitable trustee, or they don’t want to hire a professional for this task.
As a result, they might consider other alternatives. Two common suggestions are:
- Disinherit the child so they will be eligible for Medicaid and SSI.
- Leave the money to another child or relative so they can take care of the disabled child.
Unfortunately, neither of these options is a good solution. Medicaid and SSI are intended to cover only essentials, and if your child has no other source of support, they may not receive everything they need. If Medicaid decides that a new mobility aid is “unnecessary,” for example, your child will have to go without it. You can help out by purchasing items for them, but that support will come to an end when you pass it or if you disinherit the child.
Leaving money to another relative also comes with potential complications. In some situations, the relative may lose some or all of the funds due to divorce, lawsuit judgments, or other unexpected situations. If they also pass away, their heirs may not be as willing as you to support your child.
For all these reasons, the best option is to consult with a special needs estate planning attorney before setting up a trust fund.
Special Needs Estate Planning FAQ
Can You Leave a Life Insurance Policy to Your Beneficiary?
Sometimes, family members are concerned that they don’t have sufficient assets to fund their child’s lifetime care through the trust. You can make the trust the beneficiary of a life insurance policy to provide more funding while protecting your child’s ability to receive services from Medicaid and SSI.
Does a Special Needs Trust Provide Cash to the Beneficiary?
Unfortunately, dispensing cash to the beneficiary can result in a reduction of their Medicaid or SSI benefits. The trustee can use the funds to pay for goods or services on the beneficiary’s behalf, but they should not directly give cash to the beneficiary.
Who Can Be the Trustee for a Special Needs Trust?
When setting up a special needs trust, it’s also essential to appoint a trustee who will be responsible for managing the trust’s assets and distributions. This role can be filled by either a qualified individual or a professional entity. Common choices include a reliable family member, an experienced attorney, or a financial institution. If you choose a family member, it’s important to select someone who is honest, responsible, and has a solid understanding of financial matters.
It’s also wise to designate one or more successor trustees. Naming backup trustees ensures there is a clear plan in place for someone to step in and take over management duties if the original trustee is no longer able to serve.
What if the Trust Beneficiary Doesn’t Have Assets in Their Name?
In this case, a third-party trust established by the parents, other relatives, or guardians would be a suitable option to support the beneficiary.
Explore Your Options with a Bridgewater Special Needs Estate Planning Law Firm
The legal professionals at the Van Dyck Law Group are always available for a consultation to discuss the best solutions for your situation.
We understand the concerns of the parents and other family members about estate planning for a child with special needs, and we are here to help. Our team will answer your questions, identify the best options you may take, and help you move forward once you decide which path to take. Our special needs estate planning firm can be reached at (609) 293-2621 or [email protected].
