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In a recent meeting, Jeff Albrinck, an estate planning attorney at Rendigs, Fry, Kiely & Dennis, met with clients whose 45-year old son was diagnosed with Parkinson’s. The clients were concerned about their son’s long term ability to provide for himself. They wanted to amend their estate plan to leave everything to him, leaving out their other beneficiaries. After discussing their situation with Jeff, they realized the best thing they could do for their son and his family was to leave him nothing and create a special needs trust that would be available to him if needed, but never counted against him if he applied for government-sponsored benefits.

Many times when a loved one is diagnosed with an illness, family members focus on ways to help. Often, this will include gifts of money, stock, or a future inheritance. What many people don’t realize is they are actually doing more harm than good. This may inadvertently disqualify a person with special needs from government benefits. To qualify for Supplemental Security Income (SSI) and Medicaid, disabled individuals age 18 and up cannot have more than $2,000 in assets (excluding cars and homes).

Frequently, the individual with special needs is a dependent child who has been diagnosed with a condition like Autism or Down Syndrome. Even if a parent does not think they will need SSI and Medicaid for their child, it still makes sense to qualify them for benefits. This will allow the child to participate in training programs, housing arrangements and transportation that is funded by the government. It would also be a safety net if a parent loses a job or becomes disabled and can no longer provide health insurance for their child.

So, how can you help? Encourage the parents to set up a special needs trust which will protect their child’s government benefits and pay for everything except the basics such as food and shelter, which are covered by SSI. Once a trust has been established, you can gift assets or cash to the trust or make the trust a beneficiary of an insurance policy or retirement account.

If you have a child or other relative with special needs, it is important to start planning for their financial future as early as possible. We work with several attorneys, such as Jeff, who specialize in this area. We are happy to provide you with a referral, if needed.

Christine L. Carleton, CFP®