Tale of Caution: Failure to Plan for a Special Needs Child

The Smiths have three adult children. One of them, Robert, has special needs. Throughout their lives, they have ensured that Robert has received the services he needed and he now receives SSI for his disability, Medi-Cal, and Section 8 benefits for housing. When doing their estate planning, they created an irrevocable trust to protect their assets for their children in the event they had to enter long term care or passed away. They thought that they had completed their due diligence in providing for their children.

The problem, however, was that they didn’t tell their lawyer that their one child had special needs and received assistance. When they pass away, the trust they had set up is dividing three ways among their children, Robert included. This causes the other siblings to panic because the new assets now disqualify Robert from many of his programs and the assistance he receives. They seek the guidance of a lawyer, but they are told there is nothing they can do because as the parents are dead, the trust is irrevocable, and with the additional assets and funds Robert will no longer qualify for his benefits. Robert’s siblings must now figure out how to best use the money for him and when he can qualify for benefits again. This process is going to be exhausting and draining emotionally and financially. They will have to use Robert’s inheritance and they apply for his benefits again.

The Smiths didn’t realize that a Special Needs Trust needed to be set up for Robert, possibly thinking that it was only for minors and no for adult children. This is not the case, though. Special Needs Trusts ensure that if a child is receiving a form of government entitlement, those benefits are protected and the inheritance will not count against them. These trusts become “extra” for their recipients and not the main source of income. These trusts typically pay for things like education, recreation, counseling, and medical attention beyond the simple necessities of life.

If the Smiths had consulted an attorney about their special need child, even though Robert is an adult, they could have prevented this major issue later on that the remaining family will have to deal with. If they had created a Special Needs Trust from the start, their assets and any inheritance other family members wished to leave Robert could have all been directed into the trust and would not have any impact on his benefits.

If you have a special needs child, either a minor or an adult, it would be wise to immediately consult an attorney about a Special Needs Trust. You do not want to wait until it is too late and your child loses their government benefits. Special Needs Trusts protect your child financially and make sure they have access to funds for things beyond their basic necessities.

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