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Having a disabled child is both challenging and a joy. Children with disabilities are full of innocence and curiosity. I myself don't have a disabled child, however I have several friends who do. Recently, a golf buddy, who has a 20-year-old daughter in college and a 16-year-old son with down-syndrome, and I were on the golf course discussing what will happen to our children after we pass (when did I get to that age when that's a common topic of discussion?) and he mentioned how he and his wife left their entire estate to their daughter. He said she'll use the inheritance to take care of their disabled son. I looked at him astonished and said, "What about a Special Needs Trust", and he looked back at me with a puzzled expression.
Time after time I hear parents who have a disabled child making similar mistakes. If you have a disabled child you should incorporate a Third Party Special Needs Trust into your estate planning. Here are two common scenarios I've seen made by parents who were ill-informed about special needs planning, unintentionally leaving their disable child in a dangerous financial situation.
Scenario #1:
Many parents leave the entirety of their inheritance to one of their children, thinking that the non-disabled child will take care of their disabled sibling. While that child may have the best intentions in mind, life throws all of us curve balls, and that child may one day find themselves struggling in situations like bankruptcy, being sued, or a divorce. It is likely money will come out of their inheritance, and that will leave your disabled child with little to no help. Or, if the sibling suddenly passes, the remaining inheritance will be given to someone who may not find they have a financial obligation to your disabled child.
Scenario #2:
Parents will also leave their inheritance to their disabled child through a standard Will. If a child (or adult) is disabled, more likely than not they are unable to make responsible financial decisions, and will probably burn through their money very fast or be taken advantage of by an unscrupulous acquantance. Also, by receiving an inheritance they will most likely lose their SSI and Medi-Cal because it would probably exceed the government cap. If their inheritance runs out, it will be very difficult for them to receive those benefits again.
This is where the Third Party SNT comes into play.
Simply stated, a SNT preserves government benefits for disabled peoples. By setting up a SNT your child's inheritance will go into their trust, where an assigned person (someone you know, or an institution like a bank or law firm) will monitor the account. This enables them to keep their SSI and Medi-cal on the basis that they are not directly receiving large amount of money. Even more beneficial they will not need to pay the government for any Medi-Cal expenses after they pass. It's a huge win-win situation because the SNT preserves their money while a trustee watches over their accounts, they'll keep their SSI and Medi-Cal as a safety net in case their inheritance one day runs out, and there is no obligation to give the remaining trust money to the government after they pass.
Without a Third Party Special Needs Trust, your disabled child may be doomed to financial destitution. Contact the Jordan Law Offices today to discuss how you can incorporate a 3rd Party SNT into your estate planning.
