Caring for Special Needs Heirs

The already challenging task of estate planning can become even more complicated when planning for loved ones with special needs. As governments on all levels continue to tighten their financial belts, income restrictions for medical and support services typically paid for by Social Security and Medi-Cal continue to drop. Therefore, as an article in the Wall Street Journal points out, “It’s increasingly important to structure an inheritance in a way that won’t disqualify a child for such benefits down the road.”

One tip the article provided for providing for the long-term care of a special needs child is to set up a special needs trust. These trusts are particularly helpful if the child is under the age of 65, and the parent(s) anticipate requiring long-term care. Through a special needs trust, the parents are able to qualify for Medi-Cal coverage through sheltering their assets in a trust for their special needs child.

It is also important to consider whether the inheritance you plan to provide your special-needs child with does not disqualify them from their needed coverage. To avoid this, some parents choose to leave all their assets to their other children, who can then provide necessary funds and care to the special needs child. A decision to do this should be made carefully, however, to avoid serious problems. For example, if the child who inherited the special needs child’s share were to get divorced or pass away, the money meant for the special needs child could end up with the spouse or children of the spouse who inherited it.