If you have a child with special needs who will soon be turning 18, the need to plan for your future, as well as your child’s, is crucial, and the time to plan is the present. Many parents don’t stop to consider that something could happen at any moment, leaving you or your child at risk. Perhaps your death, a catastrophic injury, or a debilitating illness impairs your ability to care for yourself and your special needs child. These highly stressful events cause emotional and often financial hardship, but creating a plan now while you are clear-headed and thorough is the best way to protect you both. Planning can save a lot of money and heartache in the long run. It provides everyone peace of mind: you, your family, your friends, and your child.
Consider Your Child’s Future Needs as an Adult
Depending on the nature and extent of your child’s disability, they may need frequent assistance managing financial matters or even their daily activities. However, once your child turns 18, you no longer have the legal right to make these decisions on their behalf. Instead, it’s best to consider seeking a legal guardianship, Power of Attorney, or another plan that will protect your child.
A Petition for Guardianship requests that the court rule that someone cannot manage their daily living activities or financial affairs due to a disability. If the court approves a guardianship, the selected guardian is legally required to make decisions for the person with a disability, ensuring their best interests are always protected.
However, suppose your family member with a disability is able to make basic life decisions. In that case, it might be better to consider alternative tools such as a:
- Durable Power of Attorney with many special provisions added
- A special needs trust
- Informal family guidance
- Assisted living arrangements
- Becoming the individual’s representative payee for SSI and/or SSDI
Setting up a Special Needs Trust
A special needs trust, also called a “supplemental needs trust,” is an estate planning tool enabling an individual with a disability or functional needs to receive financial support from others without it negatively impacting any means-tested government benefits they stand to receive, such as Medicaid or Supplemental Security Income (SSI).
Since needs-based government benefits have asset and income limits, receiving financial gifts or assets might reduce or eliminate your special needs adult child’s eligibility for these services. For example, if you have an autistic adult son on SSI benefits and want to give him money for his living expenses, he could be disqualified from receiving needs-based government benefits. Similarly, if you die and leave him your Roth IRA with hundreds of thousands of dollars or any amount exceeding the asset limit, he might not be eligible to receive SSI or Medicaid anymore. However, if you put the assets into a special needs trust for your son, he can remain eligible for government benefits and still receive your financial support for the rest of his life.
Turning 18 is a notable milestone for any child. However, children with special needs face additional complex legal issues when they reach legal adulthood. An experienced special needs trust attorney can help you assess your family’s needs, helping you decide what is best for your child’s future if they are nearing their 18th birthday or any time before.