Planning an estate for a family that includes a special needs child is often more complicated, particularly if that child will need continued care throughout their lifetime. Some of the options available to parents of special needs children were recently discussed in a Wall Street Journal article titled, “Estate Planning When You Have a Special-Needs Child”.
One of the most useful tools available to parents who hope to provide financial support to their disabled child is a special needs trust. This type of trust will set aside funds for the special needs of the disabled child by keeping them under the control of a trustee. Money set aside in a special needs trust will not be counted as the disabled person’s income or assets. This allows the child to be eligible to receive government benefits such as Medicaid and Supplemental Security Income (SSI).
Life insurance is another planning option for an estate plan when a family member is disabled and will require more financial support others. Parents can leave an equal portion of their estate to every child, but then name a special needs trust for their disabled child as beneficiary of their life insurance. This can help leave an inheritance to other children while still providing additional support for the special needs child.