Few things are more beautiful and pure than a parent’s love for their child. Parents work hard to ensure that their children have the best chance at a successful career and one day retire after living a fulfilling life. However, not all children have the same needs, which requires a specific type of estate planning process to make sure their needs continue to be met even after you are no longer able to provide their care. Although the prospect of not being there to help guide your children through the rest of their lives can be anxiety-inducing, there are specific ways that you can protect your special needs child and their assets after your passing.
Tools for Disabled Individuals
A trust is a valuable tool for special needs estate planning. Disabled adults and children are vulnerable to exploitation and abuse, which makes trusts uniquely capable of granting protection to beneficiaries. The goal of each trust is to ensure that your special needs child receives the necessary support and resources to maintain their quality of life, while preserving their eligibility for government benefits such as Medicaid and Supplemental Security Income (SSI).
Special Needs Trust: A special needs trust is a type of first-party trust that is designed to provide for the ongoing care and support of an individual with a disability without affecting their eligibility for government benefits. The trust can be used to pay for a wide range of expenses, such as medical and dental care, housing, transportation, and education.
Pooled Trust – This is a type of trust in which assets from multiple beneficiaries can be combined and managed together by a nonprofit organization or professional, which will act as the trustee. Each beneficiary has a separate account within the trust, and the trustee manages the funds in the accounts to provide for the beneficiary’s needs, such as paying for medical expenses or other care services. Pooled trusts are often used by individuals with disabilities who are seeking to qualify for government benefits while also preserving some of their own assets. It works especially well if you’re concerned about whether your abled children are unable to manage your disabled child’s assets.
Funding a Trust
Funding a trust is not always an easy endeavor, which is why it’s important to look into the option of opening an “ABLE account” for your special needs child.
Achieving a Better Life Experience account (ABLE) – Is a type of tax-advantaged savings account for individuals with disabilities that was created under the Achieving a Better Life Experience (ABLE) Act of 2014. ABLE accounts are designed to help individuals with disabilities and their families save and pay for disability-related expenses, such as education, housing, transportation, and healthcare, without affecting their eligibility for government benefits. Contributions to ABLE accounts are made with after-tax dollars, but the earnings in the account grow tax-free, and withdrawals used for qualifying disability expenses are also tax-free. As part of estate planning, ABLE accounts can be used as a tool to provide for the ongoing care and support of an individual with a disability after the account holder passes away.
Although there are many types of trusts that can benefit your special needs child, developing an estate plan that has the flexibility to provide support for a wide range of needs will give you peace of mind. At Kentucky Estate Planning Law Center, our true focus is helping families plan for and take control of their future. For a consultation, contact us online, or call our office at (270) 982-2883.