Children with disabilities can benefit greatly from advanced planning on the part of their parents. Conversely, if the parents fail to plan for their special needs child’s future, that child could find themselves without resources and without assistance. Here are seven costly mistakes to avoid when planning your estate for your special needs child.
Mistake #1: Ignoring your child’s special needs when creating your estate plan
Children with special needs often depend on services and benefits provided through the state, such as SSI or Medicaid. A will or trust that doesn’t take the child’s special needs into account will probably make the child ineligible for these essential services.
Mistake #2: Disinheriting your special needs child
Some parents, aware of the eligibility issue decide to disinherit their special needs child. While protecting their special needs child’s eligibility, this leaves the child without any additional assistance or resources – things that you as a parent are currently providing.
Mistake #3: Relying on your other children to use their money for your child with special needs
Sometimes parents will give their special needs child’s share to another, with the hope that that person will use the funds for the special needs child. Unfortunately, this “solution” won’t help your child if you become incapacitated, or after you are gone. The “extra” share becomes “their” money, and there is no structure and no accountability for how it is spent.
Mistake #4: Procrastinating
Some mistakes can be more costly than others. A special needs child won’t have the resources others have to fall back upon. No one can guarantee another day, so it is important to plan early.
Mistake #5: Preventing others from contributing to the trust
The distinct advantage of creating a specific special needs trust now is that when friends and relatives plan their estate, they can make gifts to the trust. They don’t have to make any special needs planning, because you have already done so in a way that they can participate and support.
Mistake #6: Failing to protect a special needs child from predators
Giving your special needs child money through a will, even a will that has special needs provisions, gives the public all the information they need about your child and precisely how much money is available. Because a will goes through probate it is a matter of public record, available for all to see.
Mistake #7: Using a “generic” special needs trust that doesn’t fit
Your child is an individual with unique needs. Some generic terms for special needs trusts are unnecessarily inflexible. Sometimes the default language protects eligibility, but doesn’t provide enough flexibility to meet the child’s specific needs. You’ll want to talk to your estate planning attorney about the kind of services your child is currently receiving and discuss what services they are likely to have in the future.