09 Feb Do Wealthy Families Still Require a Special Needs Trust?
You’ve worked hard. And with good financial planning, you’ve been able to set aside a nest egg that amply provides for a comfortable retirement. In addition, you’ve been able to generously care for your special needs child throughout his or her childhood, and into adulthood. Since you’re well prepared financially, you find yourself wondering whether a Special Needs Trust for your disabled child is really necessary. At Phelps LaClair, serving Phoenix, Chandler, and Mesa, we’ve seen every possible scenario when it comes to leaving an inheritance to future generations. And in our experience, we’ve witnessed wealthy estates negatively impacted when not protected through proper planning—which may include a Special Needs Trust.
- First, without a Special Needs Trust in place your estate’s finances may be in danger if your disabled beneficiary is ever involved a personal injury suit.
- Second, without a Special Needs Trust, your wealth could be counted against your child when the government is determining their eligibility for Social Security benefits and/or Medicare benefits.
- Third, without proper planning, the money and property that passes to the special needs child may be controlled by the court, which creates court costs and could lead to having someone make decisions for your child that are contrary to your wishes.
What Is A Special Needs Trust?
When you’re no longer around to care for your disabled child, it’s important to have a plan set in place that will enable him or her to live a continuing quality of life that is equal to the quality of care he or she experienced while you were alive. You could choose to provide for their future through a Living Trust or Will, but doing so may disqualify them from certain benefits that are available through Social Security or Medicaid.
As this link to the AARP website shows, funds in a Special Needs Trust are not counted when government benefits are being determined. As a result, with a Special Needs Trust in place, your money can be set aside to give your disabled beneficiary the opportunity to live a higher quality of life, rather than being used up through having to pay for incredibly expensive private care benefits that can build up over the years and siphon off large sums of money. Setting aside finances for a disabled child through a Special Needs Trust will protect your estate from being drained by medical care expenses that can be unimaginably costly, and it will preserve your monies to go toward providing your child with a better life.
You want your hard-earned money to provide supplemental income for your disabled child, rather than seeing your estate go toward meeting their basic needs. Please contact Phelps LaClair to schedule a free consultation with an estate planning attorney concerning all your estate planning questions.
Images used under creative commons license – commercial use (2/9/2018) Nana B. Agyei (Flickr)