Children with special needs rely on their parents for their well-being. Balancing the child’s medical, social, emotional, and financial needs is not an easy task. Government assistance programs like Medicaid are helpful, but they come with eligibility requirements. Parents are wise to take these requirements into account when figuring out how to manage their child’s finances, both in the present and the future.
Some of the more common questions about this process are discussed below. Although the exact answers vary for each individual situation, the discussion below can serve as a foundation, a starting point to these conversations.
Will a job, inheritance, or gift impact eligibility?
Yes, these things can impact a special needs child’s eligibility for government assistance programs.
Is there a way to provide financially for my special needs child without impacting their eligibility?
In many situations, the special needs trust (SNT) can help achieve this goal. The SNT is a legal arrangement that can better ensure financial security for your child without jeopardizing their benefits.
What is a SNT?
This type of trust is a legal tool that serves to hold assets for the benefit of the special needs child. It is typically set up by a parent or guardian and holds money or a life insurance policy to support the child.
These funds belong to the trust, not the child, so if the trust is set up correctly the assets generally do not affect government benefits eligibility.
The SNT supplements government benefits.
Why would I want my child to have an SNT?
In addition to the preservation of benefit eligibility discussed above, assets held within this account can help to better ensure your child has access to the things they enjoy. This can include funding extracurricular activities, transportation to fun events, and attendance at camps.
How do I set up an SNT?
The first step is choosing the trustee. This is the individual or business that manages the trust for the benefit of the child. Parents often serve as trustees, but professional trustees are also an option. The trustee has a fiduciary duty to act in the beneficiary’s best interest.
A special needs trust can help provide peace of mind. It is important to note that these are complex legal tools. A failure to properly set up the trust can impact eligibility requirements. As such, it is wise to seek legal advice to navigate the complexities and better ensure your child’s financial security.