When it comes to parenting, planning for your kids’ future is an important part of your life. If you’re a parent of a special needs child, how you plan may look a little different, especially when it comes to finances.
One option for helping your child get an inheritance is to set up a special needs trust. There are several things you need to know about these trusts.
Medicaid and government assistance
Children and adults with special needs may be eligible for assistance programs like Medicaid. If this is the case, giving them an inheritance could push them out of these programs because of increased assets.
This could have the opposite effect of your intentions. Your child may have more money, but their quality of life could decrease because they may lose valuable medical care or access to other important state programs.
Supplemental needs trusts
Setting up a third party trust can be a great option to avoid this problem. This type of trust allows family members to leave an inheritance to a disabled person without the assets counting against their assets. This is valuable because it allows the beneficiary to stay on valuable government programs and still inherit money.
A more secure option
These types of trusts are more secure than other options. For example, some people will leave money to another family member to be used to care the disabled person. There are fewer protections on this type of arrangement. A supplemental trust means you are specifically leaving your money so someone with special needs can access the funds as supplemental income.
There are no limits to the amount of money that can be put in these trusts. If you are the parent of a disabled person, this may be an option worth exploring.