20 Feb PLANNING FOR A CHILD WITH SPECIAL NEEDS
If you have a child who has special needs and you want your child to be a beneficiary of your estate, a standard will or trust may be insufficient. A few things to consider are as follows:
- If your child became disabled before age 26, then consider an ABLE account especially if the child is likely to receive Supplemental Security Income and Medicaid. This account is much more liberal on the distributions that can be made than from a special needs trust. Although only 10 states have this type of account up and running (Texas is supposed to later this year), most states allow you to open up an account even if you are not a resident of that state. However, there are limits. No more than $14,000 (or the annual gift exclusion limit) can be deposited in such account in a year, and the account cannot have more than $100,000.
- Either a stand-alone special needs trust or one created in your will or trust or consider contributions to a pooled trust for the benefit of your disabled child (no matter what their age is). The type of trust that is best for your child will depend on your child’s circumstances. This trust will provide lifetime management, and it should not count as a resource for Medicaid if properly drafted and administered. This is particularly helpful if your child ever gets Supplemental Security Income or Medicaid.
- If you have a will, then you should specifically state whom you want as the guardian (and alternate) of your disabled child. If you do not have a will, then you should designate in a Declaration of Guardian of whom you want to be your child’s guardian (and any alternative). Courts often recognize your preference.