My Child Has Special Needs. How Does This Impact My Estate Planning?

Supporting a child with special needs can create a financial predicament for a family. Unlike the costs of raising a typical child, the expenses for a child with special needs don’t end at 18; they can continue for the rest of the child’s life. Many families rely on Social Security or Medicaid to cover some of the costs associated with caring for their child. However, eligibility for these programs is contingent on the child owning few to no assets. Many parents want to leave their child a portion of their assets in their Estate Plan, but, they fear that their child may lose access to government benefits if they do so. Fortunately, there is a way to resolve this dilemma – the Special Needs Trust.

A Special Needs Trust is a Trust that is established through your Estate documents (or could be established during your lifetime) that holds assets for the individual with special needs but still allows them to receive government benefits. The Trust is irrevocable, meaning that once you set it up, you can’t change your mind and take out the assets used to fund it. You will need to name a Trustee to manage the Trust on behalf of the beneficiary (the child with special needs). The child must be the sole beneficiary of the Trust.

The Trust can be used to pay expenses that the child incurs that do not infringe on their ability to receive government benefits. The Trust cannot be used to give the child cash or gift cards because this would reduce the amount of government benefits they receive. Similarly, the Trust is prohibited from paying for food and shelter items that are covered by the benefits. These include:

  • Rent or mortgage payments
  • Property taxes
  • Utility bills, such as water, gas, electricity, sewer, garbage collection
  • Home insurance or HOA dues
  • Food – including both groceries and restaurant meals

Other than the items listed above, the Trust can pay for any other items for the child. Some examples could include:

  • Medical care above what Medicaid pays
  • Tuition and schooling
  • Transportation
  • Clothing
  • A home for the child (provided that the home is titled in the Trust’s name and not the child’s)
  • Electronics and internet service
  • Travel and entertainment

The Trust should pay all expenses directly. If funds are given to the beneficiary to pay for expenses, they may be construed as income and make the beneficiary ineligible for government benefits or may reduce their benefits.

Special Needs Trusts are an important tool to help care for your child financially for the remainder of their life. Working with an attorney who is highly experienced in creating and overseeing the administration of this type of Trust is essential in preventing the loss of government benefits. If you want to protect the financial future of your child with special needs, contact Huth, Pratt, and Milhauser to learn more.

Huth, Pratt & Milhauser

Huth, Pratt & Milhauser is a boutique law firm that offers a wide range of legal services in the specialty areas of Wills, Trusts, Estates, Probate, Guardianship, and related matters. The range of legal services that Huth, Pratt & Milhauser provides in these specialty areas includes planning, administration and litigation. The experience and skills of our attorneys and staff, coupled with our knowledge of applicable law, enable us to provide outstanding representation to our clients.

Although we are located in South Florida, we proudly serve clients throughout the country and around the world from our Boca Raton offices. We strive to provide superior and focused counsel in a timely manner and at a competitive price.

2500 North Military Trail, Suite 460
Boca Raton, Florida   33431
Phone: 561-392-1800

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