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When estate planning with a special needs child, you must consider how your decisions will impact their enrollment in public benefit programs. You don’t want them to become ineligible for Supplemental Security Income (SSI), Medicaid, Social Security Disability Insurance (SSDI) and other long-term assistance benefits. Use this guide to help create a plan that will enhance your child’s life without preventing them from accessing these programs.

Why You Shouldn’t Leave Your Estate to the Disabled Child

estate planningWhile it might seem like the simplest route, directly leaving your estate to a disabled child is problematic on many fronts. For one, it would almost definitely disqualify them from receiving government assistance or reduce how much they receive. It also puts the child at risk of being taken advantage of or mismanaging the money; both cases would leave them without medical or financial assistance later on if the funds ran out.

Better Special Needs Estate Planning Options

Leave Estate to Siblings

If you have multiple children, you can divide the estate among the other children with the requirement that they look after their disabled sibling. This approach will only work well if the children receiving the estate don’t have outstanding debt or poor money management. You should also only consider it if the amount you’re passing on isn’t too substantial. 

Create a Special Needs Trust

To prevent the inherited estate from being considered available assets by benefit agencies, you can use a Special Needs Trust. This places all of the assets in a discretionary spendthrift trust, which makes them available to a trustee, not the child. The trustee has strict guidelines about how the money must be administered to ensure proper financial management. These trusts are often funded by a second-to-die or last-to-die life insurance policy, which involve paying a set amount in premiums to receive a payout that goes directly into the trust upon your death.

 

Don’t worry about how your special needs child will get by when you’re gone. The attorneys at Wills and Trust Hawaii have over 30 years of experience helping countless families in Honolulu with estate planning. They will help you draft a will and trust that protects your assets and takes care of every member of your family, including those with disabilities. Schedule a free initial consultation today by calling (808) 792-8777, and visit their website to learn more about their services. 

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