Disability Planning: Preserving Government Benefits

If you are the parent of a child with special needs, the need to create a comprehensive estate plan early on in your child’s life takes on a heightened importance. Like any parent, you undoubtedly want to be able to provide for your child financially, both now and in the future. In addition, you want to be sure that sufficient assets are left behind to help care for your child when you are no longer here. Leaving assets to a beneficiary with any type of disability, however, can be tricky. Directly gifting assets to your child could cause your child to lose much needed government benefits. By incorporating disability planning into your comprehensive estate plan, however, you can ensure your child’s financial security without risking the loss of benefits from critical state and federal assistance programs.

Why Is Disability Planning Necessary?

As the parent of a child with a disability, or special needs, you undoubtedly worry about your child’s future just like any other parent. Thanks to advances in medicine, science, and technology, many children with disabilities are often able to live relatively independent and self-sufficient lives once they reach adulthood. Regardless of where your child falls on the disability spectrum, however, as a parent you will likely want to make sure that sufficient funds are available to supplement what your child is able to earn, or completely provide for your child, once he/she becomes an adult. The problem comes in when your good intentions create an eligibility issue with regard to state or federal assistance programs such as Medicaid or Supplemental Security Income (SSI).

If your child is likely to depend, to any extent, on programs such as these as an adult, your well-meaning assistance will likely jeopardize your child’s eligibility because these programs are “need based” programs. Need based programs have income and asset limits that benefit recipients cannot exceed to maintain eligibility. While your child’s own income may not exceed the program limit, gifts from you could easily cause your child to exceed the assets limit. This dilemma applies both to assistance you wish to provide while you are alive as well as to any assets you wish to leave your child in your estate plan. The good news is that by incorporating disability planning into your estate plan you can accomplish your goal of providing for your child without jeopardizing his or her government benefits.

How Can Disability Planning Help?

One of the most commonly used disability planning strategies is to create a “Special Needs” trust, also referred to as a “Supplemental Needs” trust. A Special Needs trust is a very specific type of irrevocable living trust that allows you to transfer assets into the trust to be used to “supplement” the care and maintenance your adult child receives from the various government benefit programs. In other words, assets in the trust you create may be used to provide for things above and beyond what is provided by programs such as Medicaid, SSI, and public housing. Assets held in a Special Needs trust, however, can only be used to provide specific types of care and maintenance to a person with special needs. In addition, very specific language must be contained in the trust you create for the trust to be recognized and accepted as a Special Needs trust by the state or federal government for purposes of determining eligibility for assistance programs for your child. For this reason, it is imperative that you work closely with an experienced North Dakota estate planning attorney if you decide that a Special Needs trust is right for your estate plan. It is also important that you share your disability planning strategies with other family members who might be inclined to leave a gift to your child in their estate plan – with all the best intentions – that could put your child’s eligibility for government benefits at risk.

Contact Us

If you have additional questions about how to include disability planning in your estate plan, or about estate planning in general in the State of North Dakota contact the experienced estate planning attorneys at German Law by calling 701-738-0060 to schedule an appointment.