We do special needs planning here at Morton Law, but I haven’t touched on it much recently. I’d like to do so here.

Special needs refers to people with a mental or physical handicap that renders them unable to provide for themselves. Disabled individuals qualify for some kind of public assistance, usually Supplemental Security Income (SSI) and/or Medicaid.

By virtue of the fact that special needs individuals are disabled, they are not permitted to have an income if they want to receive public benefits. They’re also not allowed to have assets totalling more than $2,000, which is the limit for SSI. (If they do, they won’t qualify until they get the total down below that threshold, and then they’ll have to reapply for benefits.)

A Strategy for Maximum Assistance

So, what happens if parents want to make sure to provide for their special needs child through their estate? It’s not very effective to have the beneficiary inherit money through a will, because then the child will no longer be eligible for benefits. That inheritance money is counted toward the limit that would disqualify the individual for SSI and Medicaid.

Instead of this strategy, we recommend that you establish a trust. Here’s the incredible difference: $1 million in a trust spending on behalf of a special needs individual won’t jeopardize public benefits, but just $5,000 in inheritance would cause the beneficiary to be cut off.

Get It Done Soon

This strategy also has the benefit of giving the power over that money to a trustee. Legally, the trustee must act according to the terms of the trust, so you have more flexibility in providing for a special needs individual.

Lastly, as we often say, it’s better to have it all set up sooner rather than later. While aspects of estate planning can be done after the fact, it’s more cost-effective beforehand, since nothing goes to Medicaid. There’s also peace of mind in knowing that a special needs individual will have some extra help but won’t have the power to squander the money that’s set aside.

Special needs planning can be tricky. Please, if you have any questions on estate planning or establishing a trust for special needs individuals, don’t hesitate to give us a call! We’re here to help!

~ Ronald Morton