| Providing
for Your Disabled Child in Your Estate Plan |
PDF VERSION |
By: Barbara A. Isenhour and Sean R. Bleck
One of the biggest worries for parents of a disabled child is how to protect
and provide
for the child after both parents have died. In addition to worrying about who
will care for
your child and what your child’s quality of life will be without you to
provide for him or
her, you need to plan for how to pay for care your child will require when you
are no
longer there.
In addition to your own assets that you plan to
set aside to care for your
child there may be important government benefits that will be part of your
overall plan to
protect your child. If your child is currently receiving SSI or Medicaid
benefits (or may
be eligible for those benefits at age 18) it is very important that your estate
plan take into
account the SSI and Medicaid eligibility rules.
Qualifying for SSI and Medicaid
The SSI program is a cash benefit program available to disabled individuals.
Even if
your child is able to work in a sheltered workshop environment, he or she may
still
qualify for SSI benefits to supplement earnings. The SSI program is intended to
be a
safety net for disabled individuals to provide a minimum monthly income. The SSI
benefit amount for 2005 is $579 per month.
Medicaid is a very important health benefit for many disabled individuals.
Medicaid can
pay for hospital care, physician services, durable medical equipment
(wheelchair,
hospital bed, etc.), medications, group home care, in-home caregivers, nursing
home care
and respite care for parents. For some individuals the cost of the care paid by
Medicaid
can come to several thousand dollars per year. People who receive SSI will
automatically receive Medicaid benefits.
To qualify for SSI or Medicaid the assets that your child owns directly cannot
exceed
$2,000. There are a few assets that are not included in this $2,000 amount
including a
car, a residence, household furnishings and certain burial arrangements. If your
estate
plan leaves your disabled child an outright bequest at your death the result is
that your
child will not longer be eligible for SSI or Medicaid benefits.
Special Needs Trust
There is a way to provide for your disabled child in your estate plan while
still preserving
your child’s SSI and Medicaid benefits. If you leave the bequest for your
disabled child
to a special needs trust instead of directly to your child, SSI and Medicaid
eligibility will
not be threatened. If the special needs trust is properly drafted the assets in
the trust will
not be considered to be owned by your child and therefore not included in the
$2,000
asset limit for SSI and Medicaid eligibility.
A special needs trust directs the trustee to supplement government benefits
received by
the disabled person, not replace those benefits. The trustee cannot be required
to support
the trust beneficiary and instead must be given absolute discretion to make
distributions |
