People are frequently asking me – should I do a Supplemental Needs Trust for my child? In order to answer that question, I will need to know more details, of course.
DEFINITION: A “special needs child” is a vague classification, so what does it actually mean? A special needs child is a child with physical, developmental, emotional, or sensory challenges which impairs their ability to function on a day-to-day basis. Physical impairments could be things like multiple sclerosis or epilepsy. Developmental issues include diagnoses of autism or down syndrome. Behavioral and emotional special needs children may initially be harder to recognize, and these children may have bipolar disorder, anxiety, obsessive compulsive disorder and/or ADHD. Lastly, the sensory impairment category covers children who are blind or deaf.
FUTURE CARE: Very often special needs children will require more individualized attention, special services in and outside of school and have different needs than a child who does not experience these types of difficulties. This specialized care and services can be VERY costly. A special needs child may qualify for some of these services or medical care through insurance or state disability but that is often not enough to sustain them throughout their lifetime. Parents and other family members therefore may have to implement an estate plan to ensure that their special needs family member is taken care of in the future.
FUTURE PLAN: However, crafting an estate plan which includes provisions for a special needs child is not always easy. It requires a balance between leaving an inheritance for these children to use while not jeopardizing any state or federal benefits they may be receiving or entitled to receive. We see families with special needs children make some common mistakes when estate planning. You can watch this short YouTube video about the top three mistakes parents make when planning for special needs children here.
Please do not feel discouraged, as there are several estate planning strategies to implement to successfully plan for a child with special needs.
- This type of a plan includes a 17A Guardianship (different than an Article 81 Guardianship – for an elderly incapacitated person). This guardianship will allow a parent to continue making decisions for a child after the child turns 18.
- This type of a plan includes an outright disinheritance of the special needs child (as receiving an inheritance by that person may be quite disastrous!)
- Instead –
- This type of a plan includes a Supplemental Needs Trust – which will not impair the child’s ability to receive government assistance in the future
- This type of a plan also MUST include funding that Trust properly – either with parents / grandparents’ assets or with a life insurance policy.
A Supplemental needs trust is a very specific type of trust which allows funds to be used to supplement any benefits they are receiving and pay for medical care or living expenses, as well as pay for some additional luxuries such as family trips or pursuit of hobbies or recreational activities. To learn more about what a special needs trust is, check out this article which provides a detailed explanation of these types of trusts.
If you have questions about how to provide for a special needs child, please reach out to us on 212-709-8112 or ksverdlov@sverdlovlaw.com or book a consultation here: https://calendly.com/katyasverdlov and we will be happy to assist you.