When most people make plans, their first thoughts often include finding the most convenient and comfortable way to accomplish their goals. For example, planning a vacation may mean finding the quickest route and searching for hotels with pools or other amenities.
As a parent of a special needs child, you have all these concerns. However, you also have the over-arching responsibility to ensure your child's safety and well-being. Any plans you make for your future are entwined with the needs of your child. This is why you may be facing an additional challenge when it comes to estate planning.
Understanding how the trust works
If your child receives benefits from the Social Security Administration or other government agencies, chances are the child has restrictions on the amount of assets he or she can possess. Medicaid and Supplemental Security Income, for example, limit a person to no more than $2,000 in cash. If your estate plan includes a will that names your child as an heir, the inheritance you leave may disqualify your child from receiving those critical government benefits.
Many in your situation include special needs trusts in their estate plans. Using this tool, you can leave your child an inheritance to provide for his or her needs without disrupting the government benefits your child already receives. Here is how that works:
- The trust holds the assets you fund to it, so your child is not the legal owner of the assets.
- You can fund cash or other assets to the trust, or make the trust the beneficiary of a life insurance policy.
- Others in your family, such as grandparents, can do the same if they wish to leave something for your child.
- You choose a trustee who manages the trust, which may include investing its assets to grow the funds for your loved one.
- The trustee must also report on the trust to any government agencies from which your child received benefits.
- You also designate an advocate who is a liaison between your child and the trustee, and who works with the trustee in determining how and when to disburse funds from the trust.
- Your trust can also include specific instructions about how to use the funds and the kind of care you would like your loved one to receive after you are gone.
Creating a trust can be a complex undertaking, especially when you are dealing with the ever-changing regulations of government agencies. By working with a skilled Illinois attorney, you may obtain peace of mind that you have left a compassionate legacy for your loved one and a future full of hope.