The need for financial planning takes on heightened importance if you are the parent of a child with special needs. Fortunately, many children with special needs now live very independent lives; however, as a parent you may still wish to ensure that your child has your financial support as an adult, even after you are no longer here to provide it in person. Providing that financial support can be problematic because gifting assets directly to your child could jeopardize eligibility for critical assistance programs such as Medicaid and Supplemental Security Income (SSI). To make sure you do not make a costly mistake, the Long Island special needs planning attorneys at Eghrari Wealth Training Firm explain why special needs planning is necessary.
Special Needs Facts and Figures
Raising a child with special needs can be challenging and it may feel like no one else understands those challenges. The following facts and figures, however, indicate that you are among many parents facing similar challenges:
- Nearly one-fifth of all Americans have a physical, sensory, or intellectual disability, according to the National Organization on Disability.
- More than 41 million Americans, or almost 15% of the population age 5 and older, have some type of disability.
- One in every 26 American families reported raising children with a disability
Challenges Involved in Providing for Your Child with Special Needs
Parents have a legal, and moral, obligation to provide for a child’s care and maintenance until the child reaches the age of majority. Many parents continue to provide financial support to their children long after they become adults. If you are the parent of a child with special needs, providing that financial support is both more important and more complicated. Simply gifting funds or assets to your child, either while you are alive or upon your death, is not an option as it would be for a child without special needs. Your child will likely depend on the assistance provided by Medicaid, SSI, and other government programs for his/her entire life. Eligibility for those programs is determined, in part, by an applicant’s income and assets. Your direct gifts, therefore, could cause your child to lose his/her eligibility for assistance. Special needs planning uses estate planning tools and strategies to get around this obstacle and allow you to continue to provide for your child without jeopardizing his/her eligibility for assistance. One of the most used tools in a special needs plan is a special needs trust.
How Does a Special Needs Trust Work?
A special needs trust, also referred to as a “supplemental” needs trust, or “SNT,” is a specialized irrevocable living trust that allows you to continue to provide for your child without jeopardizing his/her eligibility for assistance. Assets held in an SNT are used to “supplemental” the care and maintenance provided by assistance programs. For example, funds from an SNT might be used to purchase a vehicle or to take a vacation. For a trust to be recognized as an SNT by SSI, Medicaid, or other assistance programs, very specific language must be used, and the trust must be drafted properly, which is one of the many reasons it is in your best interest to have a special needs planning lawyer assist you. Once created, you can transfer assets into the trust to be used to supplement the care provided to your child by programs such as SSI and Medicaid. In addition, other family members can contribute to the trust while they are alive or in their own estate plan. Best of all, a special needs trust can continue to provide supplemental financial assistance for your child long after you are gone.
Contact Long Island Special Needs Planning Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns regarding special needs planning, contact the Long Island special needs planning attorneys at Eghrari Wealth Training Firm by calling us at 631-265-0599 to schedule your appointment.
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