When you have a child with special needs, you have to think carefully about how to protect and support them. Rather than expecting to support them for roughly two decades, you will need to support them possibly for the rest of your life and even after you die.
A special needs trust can be a crucial tool for passing financial resources to a child with special needs. One of the biggest benefits of a special needs trust is that the beneficiaries can often still claim certain government benefits. Those who inherit a lot of property from their parents sometimes find themselves losing the benefits they rely on for ongoing support.
An inheritance has big financial implications
If you die and leave everything to your child with special needs, the inheritance that they receive may be as disruptive as the loss of their caregiver. There may be tax implications that your child would not be able to manage on their own. Even more concerning is how a large inheritance would eliminate someone’s eligibility for benefits.
Programs like Medicaid look at people’s property and income before granting them benefits. A large inheritance might make a child with special needs ineligible for Medicaid or Supplemental Security Income for years.
Funding a special needs trust allows you to give your child practical support without leaving them incapable of qualifying for state aid. A properly-structured special needs trust typically will not make someone ineligible for the benefits upon which they depend. Thinking about your child’s potential future needs can help you make decisions about the creation and structure of a special needs trust.