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How do you do estate planning if you have a disabled child?

By Ben Humphries, of Kentucky Estate Planning Law Center, of Elizabethtown, KY

The worst thing I have heard this week came from a person who told me that their attorney told them that because one of their three children were disabled that they should leave everything to the other non-disabled children and nothing to that disabled child.  I was shocked and hurt that a fellow attorney would give such horrible advice.  What if, after the parent died, the disabled child needed something?  What if the disabled child lost those government benefits somehow?   Most parents would say that their healthy children can simply use the inheritance to take care of the disabled child.  What if the healthy children die before the parent or die soon after the parent?  Or, even worse, what if the healthy children become disabled as well?  

So, what should the attorney have said to the person?  The person should have been told about a special needs trust that can be used to hold the inheritance for the disabled child after the parent has passed away.  The beauty of a special needs trust is that the parent can leave money to their disabled child, to make sure the disabled child has everything they need and resources if they need to supplement their government benefits, plus the disabled child gets to keep their government benefits such as disability or Medicare.  This is what they call a win-win for everyone involved and also a no-brainer when it comes to doing the estate planning for the parent. 

Upon the death of the parent a share of the inheritance goes into the trust for the disabled child, and can be used for that disabled child (subject to certain limitations provided by the government) and upon the death of the disabled child the money can go to the parent’s other children or the children of the disabled child.  These special needs trusts provide generational planning and you can do this type of planning in a basic will or in a revocable or irrevocable trust.

In fact, we like to put a special needs trust in all of our wills and trusts because you never know if one of your children may become disabled due to an accident or illness and you can easily include this type of planning in your will or trust just in case that situation arises and the trust won’t be used unless it is needed.  Simply put, a special needs trust should be in every person’s tool box when considering estate planning, especially if they have disabled children.

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