A child with special needs can
pose a complex challenge when it comes to estate planning. If the child is
expected to require special care and financial help through adulthood, this is
likely to affect how guardians divide up their assets among heirs.
To avoid missteps, parents and
grandparents in this situation need to understand their options. A
supplemental-needs trust, for example, is one of the most useful tools for
people seeking to pass on funds to a child in need of lifelong support for a
Although the trust earmarks
assets for the benefit of the inheritor, it keeps them under the management and
control of assigned trustees (typically the family members who will care for
the child after the guardian’s death). This arrangement can be crucial if the
child receives Medicaid or other government benefits related to the disability.
Since these benefits often depend on a person’s assets and income level, an
individual may suddenly not qualify for benefits if he or she receives a large
inheritance one year. Using a supplemental trust instead of transferring assets
to the child outright can help prevent that.
Life insurance also can help
simplify estate planning for those struggling to divide up assets fairly when
one heir is going to need more financial support than the others. For example,
parents can leave an equal portion of their estate to each of their children,
but then assign a life-insurance award to the supplemental-needs trust of the
child with the disability. This can alleviate anxiety about fairness by casting
the financial outlook of the child with special needs as a separate matter that
is addressed by a separate means.
here to read the original article by Henry Klosowski in the Wall Street