If you're getting ready to adopt a child with special needs, or if you already have a child with special needs, you may be wondering, do you need to do any special planning when it comes to your estate plan?

One of my friends is an adoption attorney and his job is to assist with the legal work of pairing parents with children all over the globe. And one of the first things he recommends to them is after you've done your adoption, make sure you create your estate plan. And if you've adopted a child with special needs, you may not know everything you're getting into.

Don't Try These "Hacks" With Your Estate Plan

One of the biggest issues you're going to run into with a child with special needs: 

Are there government benefits that they are entitled to receive?

It's very important that you especially account for them in your estate plan to make sure you don't endanger those government benefits after you're gone. For example, if you just allow a child with special needs to directly inherit from you as part of your estate, they may actually lose their government benefits. And then what will they do? How will they survive without the government benefits that they've been so dependent upon?

In the past, parents have, unfortunately, gone to two little "hacks" that they think are the way to handle the situation.

  • Disinherit the child entirely 
  • Just leave the money for another child and have them take care of their sibling.

Now, while some people may have thought that this was going to be the way to protect their legacy for their child, the problem is that both of these are very dangerous to your child. First of all, disinheriting them is very callous. Rather than just cut them off, why don't you create a plan to make sure that they receive a legacy from you and that they are taken care of?

If you leave the money to another child, what happens if that child dies before them? Especially if that child has children of their own, a niece and a nephew are not going to feel obliged to take care of their uncle or aunt with special needs. They may not even know about it or they may be underage, in which case your estate may have passed on to their children (your grandchildren) who have no intention of taking care of your child with special needs.

Government Benefits and Your Special Needs Trust

It's also important that any trust you create for a child with special needs is very clear on what you can use it for. As it relates to their government benefits, you can't have your special needs trust pay for things like food or shelter, which are covered by their benefits. If you do have those distributions as part of your trust, you're again endangering your child's ability to continue to receive the benefits. What happens is the government will then take your inheritance that you've given to your child or the distributions from their trust and offset it against the benefits that they should be receiving. This can cause them to miss out on months, if not years of the benefits that they're entitled to.

What Should You Do?

So, there's going to be two ways you can address this issue. One is you can stick your head in the sand and just hope that this will all work out in the end. You don't have to worry about your estate plan and just go with some form on a website.

Second is a much smarter way to do it, and the way you're going to do it, which is to work with professionals. Work with your attorney or adoption attorney. Work with a financial advisor and your tax consultants. Work with the care manager for your child. Make sure that you have a plan. A specialized plan for your child has special needs. This isn't somewhere where you want to take shortcuts and end up disinheriting or leaving the money to another child. This child needs your support. Make sure your legacy is there to protect them and provide for them after you're gone.

If you're ready to get started with a special needs trust for your estate plan, let's set up a complimentary Legal Strategy Session to discuss the best options for you and your family.

Andrew Ayers
Connect with me
I work with business and estate planning clients to craft legal solutions to protect their legacies.