Different types of special needs trusts are available for those family members who wish to set up a structure in which to pass on assets to an adult child with special needs. This can help to ensure that the adult child is able to receive the medical and other state benefits provided to them due to their condition.
It is important to understand that passing on the asset directly could accidentally disqualify the adult child from these important benefits, such as Medicaid or supplemental security income.
As the parent of a child with special needs, proper advanced planning can help pass on a legacy to the adult child and help support them financially for many years. The most common tool to do this is a tool known as a special needs trust. Two popular options are an individual special needs trust and a pooled special needs trust.
An individual special needs trust is one that is created for the benefit of one disabled party. Pooled special needs trust, however, have to be administered by a non-profit trustee and are created for serving many disabled parties at once. Any monies that are left inside the trust at the time that the disabled individual passes away must be paid to the government with a first party individual special needs trust. The government does also get repaid with pooled special needs trust but only to the extent not retained by the pooled trust itself.
Leaving money behind to others outright can create serious problems and even minor mistakes in the establishment of these trusts can have far reaching implications. Schedule a consultation with a knowledgeable estate planning lawyer so that you can learn more about the strategies available to you.