According to the Centers for Disease Control and Prevention (CDC), around 1 in 88 American children are on the autism spectrum, which represents a ten-fold increase in the last 40 years. ASD affects more than 2 million individuals in the United States and tens of millions across the globe. With no established explanation as to why the ASD rates continue to increase, parents of autistic children are left with the responsibility of hoping for the best while doing what they can to care for their child’s future.
Autism isn’t the only condition that is afflicting America’s children. Many children suffer from Down syndrome, which is a genetic disorder that causes lifelong mental retardation and developmental delays. Unfortunately, children with Down syndrome can experience a variety of complications, some of which can become more prominent as they age. Such complications include heart defects, leukemia, dementia, obesity and infectious diseases.
Whether a child has autism or Down syndrome or another disabling condition, the child’s parents will be concerned about their child’s long-term care, and they will need to think about how their child will survive when they are gone. One of the most important things a parent of a special needs child can do to establish financial security for their son or daughter is to create what is called a special needs trust.
The primary purpose of a special needs trust is to preserve a disabled child’s government benefits. Usually these benefits come from government programs which have eligibility requirements. If a disabled child receives an inheritance when their parents pass, it will disqualify him or her for much needed government benefits such as Supplemental Security Income (SSI) and Medi-Cal, which is California’s version of the Medicaid program. What’s more, housing subsidies, in-home support services, food stamps and utility assistance are all also based on financial need.
In general, parents of special needs children do not give their children large amounts of money because they are not capable of managing their own finances. If parents leave a large amount of money to a special needs child in a traditional will or trust, their disabled child will run into major financial problems. If the child receives any measurable inheritance, it will increase his or her assets far above the threshold for SSI and Medi-Cal, which will disqualify the child from those programs and they will no longer receive those benefits.
By establishing a special needs trust, the trust would not be in control of the child, but instead an independent trustee – this is known as a third party special needs trust. A third party special needs trust can pay for services required by a disabled child such as education or car repairs etc. without affecting their eligibility for a government program. However, the trustee would not make cash payments directly to the child because payments would be counted as income and could result in a loss of benefits.
To learn more about the wonderful benefits of a special needs trust and why it’s critical to establish one for a special needs child, contact a Riverside estate planning attorney from Dennis M. Sandoval, a PLC at (951) 968-0980 to schedule your free, one-hour consultation.