5 Mistakes To Avoid When Developing a Family Plan for a Child with Special Needs

Caring for a special needs child can be difficult. Planning for their care after you die is equally complex. One popular way to protect a disabled child is to create a special needs trust. But these trusts’ aren’t foolproof. And they aren’t your only option. No matter your strategy, you must ensure you don’t create more problems for your child.

Special needs planning is necessary if you have a disabled child. Since state laws vary, working with an experienced trust planning attorney in your area is a good idea. They can explain your state’s laws. They can also create an estate plan with a special needs trust that achieves your goals for your special needs child.

What Is Special Needs Planning?

Estate planning is planning for your family after you die. Parents with a special needs child need to do planning beyond the typical estate plan.

A special needs child is a child that needs care and attention beyond what other children need. Specific special needs include the following:

• Physical disabilities such as epilepsy
• Behavioral and mental health such as ADD and bipolar disorder
• Developmental disabilities like autism and Down syndrome

A child’s disability can be challenging for their caregivers. Planning for what happens to a special needs loved one is essential to ensure they are appropriately cared for. Unfortunately, such planning is complex. A mistake can impact your child for life. People make five common mistakes when planning for a special needs child.

Not Considering Public Benefits Programs.

Many special needs children receive government benefits. The most common are Medicaid or Supplemental Security Income (SSI). You must structure your plan correctly. If you don’t, you could jeopardize your child’s eligibility for these benefits.

For example, you shouldn’t leave your special needs child an outright inheritance. Instead, you may be able to create a special needs trust. You leave the child’s inheritance to the trust. So, the trust essentially owns the money. The trust will then give your child money to meet their needs. But if you give money directly to your child, that influx of assets could disqualify them from government benefits.

Another mistake to look out for is family members who want to leave an inheritance to your child. You should let your family know you’re establishing the special needs trust. They should ensure the assets they leave for your child go into the trust.

Also, be careful naming a special needs child as the beneficiary of your life insurance and retirement accounts. Those are also direct payments to the child. Naming the trust as the beneficiary could protect your child’s eligibility for benefits.

Disinheriting Your Special Needs Child

Some people think they can’t give their special needs child an inheritance. The reason is that doing so will cause them to lose their public benefits. That mistaken belief leads them to disinherit their child. But, you can use a special needs trust to leave them an inheritance.

Selecting the Wrong Trustee

The trustee is the person who administers your special needs trust. Many naturally want to select a family member to manage a special needs trust. But that may not be the best idea. A professional trustee may be better. They’ll be able to manage the trust consistent with the law while protecting your child’s eligibility for public benefits.

Not Using an Experienced Attorney

You may think you can handle the financial planning of a special needs child. But special needs planning is intricate. It’s also crucial to the future well-being of your child. So, developing a proper special needs trust is best left in the hands of an attorney familiar with your state’s laws. If not appropriately drafted, the trust may not protect your child as intended.

Not Adequately Funding the Trust

You must fund the trust with enough money to maintain your child’s quality of life. There are various funding sources, such as a payout from a life insurance policy. You can also fund a special needs trust from an ABLE account. An ABLE account is a special savings account for disabled individuals.

Contact an Experienced Estate Planning Attorney for Help

Proper planning can protect your child’s future. It’s even more critical when your child has special needs. But special needs planning is complex. Contact an experienced estate planning attorney if you have a special needs child. An experienced attorney can explain your options. They can also help you prepare the needed legal documents.