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Special Needs Trust

• IMPORTANT REPORT EVERY SPECIAL NEEDS FAMILY MUST KNOW ABOUT ESTATE PLANNING
• Planning for your autistic child’s future can bring peace of mind
• Five estate planning mistakes made by parents with special needs children
• Could you benefit from a Special Needs Trust?

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News

• Many special needs children lack plans for lifetime of care...
  Posted on 4/17/2009
• Importance of Special Needs Trusts Highlighted by Non-Profit...
  Posted on 3/4/2009

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Library

Special Needs Trust

• Part 11 of 12 - Facts Every Special Needs Family Must Know About Estate Planning
• Part 12 of 12 - Facts Every Special Needs Family Must Know About Estate Planning
• Part 9 of 12 Facts Every Special Needs Family Must Know About Estate Planning
• Part 7 of 12 - Facts Every Special Needs Family Should Know About Estate Planning
• Part 8 of 12 - FACTS EVERY SPECIAL NEEDS FAMILY MUST KNOW

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Part 9 of 12 Facts Every Special Needs Family Must Know About Estate Planning

Fact # 9 – Know the advantages and disadvantages of disinheriting a special needs child.

If your estate will not be able to provide for the considerable lifetime needs of your special needs child, government benefits will be required. One way of insuring these benefits will not be jeopardized is by disinheritance, that is by not providing your special needs child with any of your property either by an outright gift or by a trust. The law allows a parent to disinherit a child. Disinheritance may be a good option if the estate is small and when establishing a trust isn’t feasible. Unfortunately, disinheritance is too often the only option considered.

Even if your not leaving your special needs child anything of significant monetary value, you may plan on leaving a gift of some sentimental or personal significance. In addition, if you choose disinheritance, your lawyer should consider adding explicit language to make it plain that:

(1) your choice was deliberate (and not unintentional or an oversight);
(2) that your choice was not the result of malice but, to the contrary, was the result of a careful assessment of your special needs child’s best interest and, specifically, the impact of a direct bequest on your special needs child’s government benefits; and
(3) if applicable, that you have made alternative arrangements for your special needs child.

This estate planning method, however, has several significant drawbacks. This method creates no legally enforceable rights for the special needs child to actually receive the gift you have in mind, and no enforceable duties for the other beneficiaries to distribute the gift in accordance with your wishes. The other person/beneficiary must pay any taxes on income arising from that gift, and may feel obligated to use his or her own assets to care for the special needs child if the gift is insufficient. Keep in mind that what you may think you’re setting aside for your special needs child actually legally belongs to the other person/beneficiary and may be used by that person’s creditors to satisfy debts, and, when that person dies, becomes part of his or her estate. In addition, if that person dies or becomes disabled during the special need child’s lifetime, your special needs child will have no guarantee of continuity of care.

On the positive side, a morally obligated gift is uncomplicated, poses little risk to your relative’s government benefits, and entails no ongoing fees. If you are confident of the person you choose to carry out your wishes, this option may be viable.

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questions

Special Needs Trust

• Is there a difference between a special needs trust and a supplemental needs trust?

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