An estate plan creates a specific outline of what you intend to do with your assets after your death. It is the best way to protect your family and ensure the carrying out of your wishes.
If you have a child with special needs, you can make specific provisions for them.
Options available during estate planning
While creating your estate plan, you essentially have four options for a child receiving benefits:
- You can leave the child an inheritance. This is only a feasible option if you leave enough to cover any needs, including medical, for a lifetime. The likely effect is ineligibility for benefits, such as Social Security Insurance or Medicaid.
- You can disinherit the child. This protects benefits but does not help the child.
- You can leave the inheritance to a third party. The third-party could be siblings or another family member. This is sometimes a viable option if you know they will use the inheritance to care for your child.
- You can leave it in a special needs trust. This option allows you to leave an inheritance that will not affect benefits because it is not directly accessible to the child.
With a special needs trust, you name a trustee to handle the child’s inheritance.
Revocable or irrevocable special needs trust
Taxes are the primary consideration with deciding between a revocable or irrevocable trust. A revocable trust is subject to income tax. With an irrevocable trust, tax considerations mostly apply to gift taxes and federal estate taxes.
Every estate plan is different and designed to cater to your wants and needs.
