Estate Planning for Parents of Special Needs Children

Estate Planning for Parents of Special Needs Children

For parents of children with a disability, estate planning is particularly vital to ensuring the best possible future for your child after you’re gone. The estate planning process presents unique challenges, especially if your child receives needs-based government benefits such as Supplemental Security Income (SSI) or Medicaid.

Naming a Guardian for Your Special Needs Child

Designating a guardian is an estate planning decision with, perhaps, the greatest long-term impact for your child. Discuss your expectations and child’s needs with your designated guardian to ensure they are up to the task. In your estate planning documentation, include a list of your child’s medical providers and history as well. You may also want to write down some of your child’s likes and dislikes – anything to help ease the transition.

Estate Planning Strategies to Consider

Parents of children with special needs have several estate planning options available, but need to weigh the best combination to enrich the life of their child without sacrificing the child’s enrollment in any public benefit programs such as SSI or Medicaid.

Option 1 – Distributing Assets Outright

You can use a traditional Last Will and Testament to leave your assets directly to your special needs child. This option could potentially impact your child’s ability to receive needs-based public benefits.

Option 2 – Disinheriting the Child

To protect your child’s needs-based public benefits, you could disinherit the child entirely. Disinheriting the child provides no legal recourse to receive any of your estate, however, and provides no safety net in the event they can no longer receive public benefits.

Option 3 – Leaving the Inheritance to a Sibling or Other Relative

You could leave your estate to a family member or sibling, with the intention for them to share the inheritance with your special needs child. This option has its own risks. The recipient has no legal obligation to share the inheritance and the inheritance could fall prey to claims from creditors or improper management of the funds.

Option 4 – Special Needs Trust

A special needs trust is a trust designed specifically for mentally ill or disabled beneficiaries. Special needs trusts ensure beneficiaries receive funds without risking eligibility for needs-based public benefits programs such as SSI or Medicaid. You must name a trustee, such as a family member or third-party, to manage the funds for your special needs child.

Due to the unique estate planning requirements, consult with an attorney who is well-versed in special needs trusts and disability benefits to ensure you set up your estate plan to the greatest benefit of your special needs child. Contact a Fifth Third Bank financial advisor today to get started.

Fifth Third Bank does not provide tax or legal advice. Please consult your tax adviser or attorney before making any decisions or taking any action based on this information. This information is provided for educational purposes only and does not constitute the rendering of tax or legal advice. Fifth Third Bancorp provides access to investments and investment services through various subsidiaries, including Fifth Third Securities. Fifth Third Securities is the trade name used by Fifth Third Securities, Inc., member FINRA/SIPC, a registered broker-dealer and a registered investment advisor registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Securities and investments offered through Fifth Third Securities, Inc. and insurance products: Are Not FDIC Insured | Offer No Bank Guarantee | May Lose Value Are Not Insured By Any Federal Government Agency | Are Not A Deposit Insurance products made available through Fifth Third Insurance Agency, Inc. © 2018 Fifth Third Bank Excerpt from Fifth Third Bank LegacyLink.