Planning for Your Adult Children With Special Needs Can Also Protect Your Assets From Nursing Home Costs
Parents and grandparents of an adult disabled child often ask what’s the best way to make provisions for that member of the family who will not be able to be self-sufficient. Parents generally try to consider the future non-financial needs of the child after the parents are gone. With whom or where will the child live? What housing options or assistance are available? What activities does the child enjoy? Next, there is a need to estimate the future financial needs of the child, taking into account projected government assistance.
When the parents of disabled children think about a financial and estate plan, they plan for their own future, as well as the child’s. Parents with disabled children understand the need to protect their own savings from risks during their lives. Nursing home costs pose a threat to every estate.
Luckily, the Medicaid rules offer important special protections for parents of disabled children by allowing gifts to be made to supplemental needs trusts for the benefit of adult children with disabilities. These gifts do not create a disqualification or penalty period for the parents if they will need nursing home care for themselves in the future.
Another important question is this. How will the parents’ estate be allocated to reach the goals they have for themselves and their child? They may consider leaving a larger share for the disabled child who has greater need than the other children.
However, this is generally not a good option if government benefits may be needed, since most government assistance requires the recipient to have very low income, very low assets, or both. An outright bequest to the child or a trust which gives the child too much ownership over the money will disqualify the child from government assistance until the child spends down the trust assets.
As part of their overall estate planning, parents of special needs children can have a portion (or all) of their estate stay in a trust for the benefit of their disabled child after they die.
The assets will be managed by a Trustee chosen by the parents. In some situations, a brother or sister of the child with special needs is a good choice. Other times, it would be better to name a professional trustee with experience in managing special needs trusts and providing services to the beneficiary.
The trust should be drafted so as to not disqualify the child from government assistance. This kind of a trust is called a supplemental or special needs trust. The parents can include guidance or legally binding directives about how the money is to be used for the child.
Even small amounts in a special needs trust can make a huge difference in the quality of life of a disabled child. For example, while the child’s basic needs could be met with government assistance, the trust could be used to provide “extras” like a television, a trip to visit relatives or tickets for relatives to visit the child, a special van, or computer with voice-recognition technology.
Dagmar M. Pollex, Esq.
Law Offices of Dagmar M. Pollex, P.C.
Braintree, Massachusetts 02184