Imagine that you have a child with special needs who relies on Social Security income for support. Although you do not have substantial income, you have saved up a small nest egg over the course of your life that you would like to pass on to your child. If your child did not have special needs, you could probably leave that child an inheritance that would be nothing but helpful and appreciated. Because your child relies on Social Security income, however, your well-intentioned inheritance could disqualify her from the benefit upon which she relies.
If you left your child a $50,000 inheritance, for instance, her resources would exceed Social Security’s threshold, and she would no longer be eligible to receive support from the program. Your inheritance, then, would go towards paying for your child’s health care, and when the inheritance was all gone, she would have to reapply for the benefit. The way around this conundrum, however, is by exercising foresight and working with a special needs trust attorney.
Instead of leaving your child with special needs a direct inheritance, you could leave establish for her a special needs trust. Because funds placed in a special needs trust are not counted for purposes of Social Security eligibility, your child could maintain benefit eligibility even after you are gone. As you should probably know by now, there is a complex web of rules that surround special needs trusts, so you must be careful when establishing and funding such a trust. Without a special needs trust attorney, it can be a very difficult thing to do.
The Elder Law Department at JacksonWhite has attorneys able to consult with families facing this legal issue. Contact us today to find out more about consultation times and the details of your specific case.