If your child has a disability, you are not alone. According to the US Census Bureau, more than three million children (4.3% of the under-18 population) in the country had a disability in 2019, which is up 0.4% higher since 2008. Medical care and long term treatment can be terrifically expensive. One way to ensure that those needs will be met while protecting your assets is through a special or supplemental needs trust. Through that trust, your child may qualify for various government programs while also benefiting from assets you set aside.
Special or supplemental needs trust planning is necessary to make sure that your child can enjoy the benefit of the trust without negatively impacting his or her eligibility for government benefits under Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), Medi-Cal and many other programs.
For this to work the benefits received by your child through the special needs trust cannot duplicate government program benefits. Also, the trust assets cannot be owned by your child and the trustee must have complete discretion under the terms of the trust to make distributions or investments.
Instead of leaving assets directly to the disabled adult child through a will, you could create a special needs trust in your living trust or will. Your assets are protected in that the trust allows government benefits to continue to pay for your child’s necessities, freeing up your assets to be spent on making your child’s life more comfortable. The trust would own various assets that are used by the child such as a car or home. Because the trust owns them, not the child, they are not counted as being owned by the child when an agency determines if the child qualifies for benefits. The trust could pay for such things as telephone bills, education or car repairs without affecting the eligibility for government programs. The trustee would not be able to make cash payments to your child because they would be considered income, resulting in reduced or lost benefits. The trustee would be independent and the trust would continue for the lifetime of the child.
If you live in Orange County, California or the surrounding areas and have questions regarding protecting your assets while doing special needs planning, contact the lawyers at OC Wills & Trust Attorneys by calling (949)288-3598 for a consultation.