The property that you leave for your children when you die can help support them for years. Their inheritance will solidify your legacy and influence how they remember you for years to come. Every child that you have raised might benefit from a carefully-structured estate plan that protects their inheritance.
When your child has more challenges than the average individual, your proactive planning becomes that much more important. Adults who have children with special needs have to think very carefully about what resources they try to leave for their children and how they pass those assets to the next generation.
There are two concerns you need to contemplate if you hope to leave assets for your child with special needs.
The potential for abuse
The more resources you leave directly to a child with special needs, the more attractive their inheritance will be to those with malicious intent. Financial abuse is a very real concern for adults with special needs.
When a vulnerable adult has direct control over their own assets, it may encourage the worst behavior in other people. By creating a special needs trust, you create a special relationship where the trustee will help provide financial oversight for your child and protect them from the possibility of financial abuse.
The risk of losing crucial benefits
For your child with special needs to receive housing benefits, Medicaid and other forms of state aid as an adult, they have to meet very strict limits on their personal property and income. A direct inheritance could immediately eliminate someone’s ongoing benefits and prevent them from qualifying for a long time afterward. A trust, on the other hand, can limit how much someone receives and prevent the loss of the benefits that they depend on for daily life.
Although a special needs trust does require additional paperwork and planning, it can provide incalculable benefits to your child after your death. You can fund it slowly over many years, by transferring the title of your home or arranging for your life insurance proceeds to fund the trust after your death.