There are many issues to consider when you are setting up your estate plan. If you have a special needs child, estate planning is often more complicated because of the additional worries over who will watch out for your child, even if they are an adult. Special needs disabilities can have a significant impact not only on the child’s ability to work but there are often astronomical financial costs associated with the care throughout their lifetime, which often run into the millions of dollars. If you have a special needs child, a Southern California trust administration lawyer can help make sure your child is taken care of when you are no longer here.
Special Needs Trust
When a parent dies and leaves assets to their children, usually the only financial concern is what type of estate tax there may be. Inheritance does not usually impact a beneficiary’s income. However, an adult special needs child who is receiving Supplemental Security Income (SSI) and Medicaid benefits has a limit on how much they can have in financial resources. A significant inheritance could result in the loss of those benefits.
The good news is that a Southern California trust administration lawyer can help parents set up a special needs trust. This trust can ensure that an adult special needs child will be taken care of using the assets the parent leaves them in the trust, yet these assets will not cause any issues or interfere with the SSI or Medicaid benefits they may be receiving.
There are two types of special needs trust that a parent may set up. The first is referred to as a first-party trust. The funds are considered the child’s funds (i.e. a gift from the parent or an inheritance). When the child dies, any assets left in the trust go directly to the government to reimburse Medicaid expenses that were covered for the child’s medical care.
The second type, called a third-party trust or a testamentary trust, is set up now but does not have funding. The funding goes in once the parent dies. However, once the child dies, any left-over assets are inherited by whomever the child has designated as a beneficiary and do not go to the government for any type of reimbursement.
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If you have a special needs child, it is understandable the extra worry and concern you have about what will happen to that child when you are no longer here. Having a solid estate plan that protects the assets you will leave your child is critical. To learn more, contact Holborn Law to schedule a free consultation with a dedicated Southern California trust administration lawyer and have the peace of mind that your family will be protected when you are no longer here.