Leaving an inheritance to a child with special needs

By December 13, 2010Uncategorized

Money in a special needs trust is used to supplement the care provided to a person from a public benefit program, such as SSI or Medicaid.  And, as you probably know by now from reading the blog, special needs trust funds can only be used for certain purposes – any unapproved expenditure of the money, such as giving it outright to the individual with special needs, may jeopardize the trust beneficiary’s eligibility for benefits.  This, of course, means that there is a degree of complexity involved with administering the trust, and this complexity oftentimes causes people to think twice about establishing a Medicaid special needs trust for a child with special needs.

Before anybody rules out a special needs trust on the grounds that it is too complex, however, they should consider the alternatives.  Or, rather, they should consider the lack of alternatives.  Parents who leave their child with special needs an inheritance could very well disqualify that child from very important public benefit programs, which should rule out this alternative right away.  Another plan that some people have attempted is simply leaving the inheritance to another family member, under the agreement that that person will use the inheritance to take care of the child with special needs.  This, of course, is quite problematic because there is absolutely no certainty – once the family member receives the inheritance, what is to say that he or she will really use it for the child with special needs?

In reality, the best way to leave an inheritance to a child with special needs is with a special needs trust.  The trust will not jeopardize the child’s eligibility for benefits, and the parents can be certain that the funds will be used on the child.  And, despite what many people may think, establishing and administering a special needs trust does not have to be complicated.  A special needs trust attorney should be involved with the process that can explain the ins and outs of special needs trusts.  Further, the special needs trust attorney should explain to the trustee precisely how the funds may be used so that the trustee does not make any inappropriate expenditures from the trust.  In the end, the advantages of establishing a special needs trust can outweigh any complications that families perceive to be involved.