If you are supporting your adult special needs child financially, you recognize that there may come the day that you are unable to meet your child’s needs, either due to old age or death. Is there a way you can continue to support them after you are gone in a way that does not disqualify them for the government benefits that they also need to afford their basic needs and lifestyle?
The problem with government benefits
An adult with special needs may be unable to work to earn enough to support themselves independently and thus may be the recipients of government benefits such as Supplemental Security Income (SSI) or Medicaid.
However, these benefits alone generally are not enough to support an adult with no extra resources. Moreover, to qualify for these benefits, you must have little to no income. This could prevent a parent from contributing financially to the needs of their adult special needs child or leaving their adult special needs child an inheritance in their will.
The special needs trust
The estate planning vehicle that may help those in this situation is the special needs trust. A special needs trust is managed by a trustee who could be anyone other than the special needs adult benefiting from the trust.
The trust is usually a third-party trust, meaning it is funded by someone on behalf of the special needs adult. For example, a parent can move assets into the trust. Then the trustee can distribute trust assets to the special needs adult. The income earned from a special needs trust is not counted for purposes of qualifying for government benefits such as SSI or Medicaid.
Most parents want to ensure that their child’s financial needs are met and this is especially true for parents of special needs children. The worry over what will happen to your adult special needs child when you can no longer provide for them can keep a parent up at night. Fortunately, special needs trusts help many facing this problem by providing a special needs adult with a stream of income without disqualifying them for the government benefits they need.