Individuals with mental, physical and developmental disabilities often lack the financial ability to care for themselves. If your adult son or daughter cannot work because of a disability, he or she may struggle to pay basic living expenses and medical costs.
Needs-based government programs are often available to disabled adults. When you are planning your estate, you may want to leave money, property or other assets to your disabled child. If you do, though, you may inadvertently sabotage your child’s eligibility for government help. Setting up a special needs trust may be the right workaround.
To qualify for many public assistance programs, such as Medicaid or Supplemental Security Income, individuals must have limited income. When you establish a special needs trust, you do not transfer assets to your child. Instead, funds remain in trust for the benefit of your son or daughter. As a result, trust disbursements usually do not constitute income for purposes of qualifying for government benefits.
Quality of life
If your adult child has a life-limiting disability or medical condition, you may worry about his or her overall quality of life. After all, your loved one may not have enough money to pay for travel, recreational activities or even out-of-pocket medical care.
While funds from a special needs trust cannot pay for ordinary living expenses, like rent or utilities, they can supplement these costs. Specifically, your son or daughter may use disbursements from the trust to pay for items or services that enrich the quality of his or her life.
Because of a disability, your child may lack the skills necessary to manage money. When you establish a special needs trust, you designate a trustee to oversee the trust. This individual should understand the needs of your disabled son or daughter. Before making a disbursement from the trust, the trustee should consider your disabled child’s interests.
The special needs trustee should also take steps to ensure trust funds do not harm eligibility for government benefits. Either way, to continue to support your disabled child throughout his or her adulthood, you may want to explore a special needs trust.