When you have a special needs child, not only do you worry about how they will be cared for from a health perspective, but you also worry about how to provide for them after you are gone. Whereas most parents can leave their assets outright to their adult children, parents of a special needs child need to be more careful and give more consideration to how they will leave their assets. Advance planning by parents can make all the difference in the life of the child with special needs, as well as for siblings who may be left with caretaking responsibilities.
Special needs trusts (also known as “supplemental needs” trusts) allow a disabled beneficiary to receive gifts, lawsuit settlements, or other funds and yet not lose his or her eligibility for certain government programs. A Special Needs Trust can also protect a spouse who is receiving, or likely to receive, Medicaid benefits for nursing home care from being disqualified for benefits. Such trusts are drafted so that the funds will not be considered to belong to the beneficiary when determining eligibility for public benefits, such as nursing home care. You of course want to provide for that person but if you are thinking of leaving the person a lump sum, you should reconsider. Your “gift” could render your loved one ineligible for government benefits he’d otherwise be entitled to, like SSI or Medicaid.
Florida law states that your spouse must receive 30% of your “augmented estate” whether or not the assets are probated. If you predecease your spouse, his inheritance may result in his being dropped from the Medicaid program until the inheritance is completely exhausted.
But, by leaving the 30% in a Special Needs Trust, you can ensure that benefits are not interrupted. You may also include provisions in the trust so that when your spouse dies, any remaining trust assets pass to the beneficiaries.
The Special Needs Trust can be used for a variety of life-enhancing expenditures without compromising your loved ones’ eligibility such as:
- Annual check-ups at an independent medical facility
- Attendance of religious services
- Supplemental education and tutoring
- Out-of-pocket medical and dental expenses
- Transportation (including purchase of a vehicle)
- Maintenance of vehicles
- Purchase materials for a hobby or recreation activity
- Funds for trips or vacations
- Funds for entertainment such as movies, shows, or ballgames.
- Purchase of goods and services that add pleasure and quality to life: computers, videos, furniture, or electronics.
- Athletic training or competitions
- Special dietary needs
- Personal care attendant or escort