Special Needs Trust For Heirs With Down Syndrome

Hi there, Bridget Mackay. I’m an estate planning attorney in Petaluma, California, and I practice in estate planning, trust administration and probates, and elder law. Today I want to talk about special needs trust for heirs who may have Down syndrome.

Every year, 6,000 babies are born in the US with Down syndrome. Over their lifetimes, they may experience some serious medical conditions, but often they will require special care as they age. In order to pay for that care, families will take advantage of government entitlements that are set up to assist with the cost of their care. Parents often want to make sure that their children with Down syndrome are well cared for, happy, and healthy throughout their lives, and they often leave money for them in the form of a will or a trust or a life insurance policy or even retirement benefits. However, they need to know that if a child with Down syndrome receives this money directly through those instruments, it could disqualify them for their governmental benefits, like SSI and Medi-Cal. SSI benefits limit the receiver to having only $2,000 in assets. So a monetary inheritance from a grandmother or a parent to a Down syndrome child could have huge consequences.

What’s the best way to plan for your Down syndrome child or grandchild? You should establish a special needs trust. Often these trusts go into effect at the time the parent or the grandparent dies. They are often written within that parent or grandparent’s trust, and so there aren’t separate documents prepared. And the way they protect those monies for that child is that they’re irrevocable and they have a third party as the trustee who distributes that money, and that allows that child to keep their government benefits. What does the trust do for them? It often pays for what are considered their special needs, like special treatments for their care, special trips or vacations that they want to go on or be a part of, gifts to others that they can give, things like, if they’re in a living situation, TVs or new couches or creature comforts in that way, and in some cases, housing. Generally, they’re spent on things that enhance their lives and accomplish that goal of their child having a happy and healthy life.

In order to protect your child with Down syndrome, contact a qualified estate planning attorney and talk to them about setting up special needs trusts.

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