Caring For Children With Disabilities Through An Estate Plan
Before leaving an inheritance to a child with special needs, it’s important to be aware that by doing so, you could disqualify the child from the public benefits they rely on such as Medicaid or Social Security Income (SSI). Furthermore, upon receipt of the inheritance, the government may seek reimbursement for payments made for medical care, housing and other services provided. The inheritance could thus very well go to Uncle Sam instead of the child you wished to help.
Fortunately, there are ways to provide for children with special needs through careful and effective estate planning. At Korsinsky & Klein LLP, our experienced lawyers can help you navigate your options for caring for a child with disabilities throughout their lifespan.
Understanding Special Needs Trusts
Special Needs Trusts (SNTs) are one tool for gifting funds or assets while preserving the recipient’s ability to receive public benefits. However, these Trusts have strict requirements on how the funds may be used. Usually, these Trusts set aside the funds for specific medical treatments and therapies that are not covered under the benefits. These Trusts may also require that the funds remaining in the Trust after the trustee has passed are given to the state. Therefore, setting up a Trust may not always be the best option.
There are different types of Special Needs Trusts to consider. Third-Party SNTs are created by a third party for the disabled person, while a First-Party SNT is created by the disabled person for their own sake. Both types allow the beneficiary to continue receiving benefits while keeping their inheritance. However, each of these Trusts comes with restrictions and penalties that should be taken into consideration when evaluating the estate and inheritance.
Achieving A Better Life Experience Act Of 2014
The Achieving a Better Life Experience (ABLE) Act of 2014 allows people with disabilities to save for disability expenses without losing their assistance program benefits. New York ABLE allows deposits up to $15,000 yearly into the account without losing other government funding. These funds can be used for expenses, including legal costs, assistive technology, and funeral and burial expenses.
Other Options To Consider
Depending on the amount of the inheritance, it may be prudent to forego government benefits. If the inheritance is substantial, it may be more beneficial to simply use the inheritance to pay for medical care and other costs. Establishing a special needs account may be too restrictive and limiting on how the funds are utilized.
Another option may be to utilize the inheritance to pay for a home, vehicle or another exempt resource that still allows the beneficiary to retain government benefits. Spending the money inherited properly may be the most effective way to preserve benefits and still use the inheritance.
We Can Help You Put The Right Tools Into Place
If you need help with estate planning for a disabled child, contact our New York City estate planning attorneys at Korsinsky & Klein LLP, today. We can guide you through the entire process. Located in Manhattan, Brooklyn and Lakewood, New Jersey, we assist clients throughout New York City and New Jersey. For an initial consultation, call us at 212-257-0199 or contact us online.