Guest Op-Ed: Planning for a special needs child
BY RONALD A. FATOULLAH, ESQ. AND DEBBY ROSENFELD, ESQ.
Creating a special needs trust is a way to provide for the needs of a disabled child without making him or her ineligible for Medicaid, Supplemental Security Income (“SSI”) and other programs that require the recipients to have limited assets.
Transferring (gifting) assets to this type of trust allows a parent, relative or friend to provide for extras that will improve the adult child’s life experience without compromising the governmental services he or she may need on a daily basis.
Parents who have children with special needs often think they do not have to establish a special needs trust for their child (or children) until the child turns 18 years of age. The general thinking is that until a disabled child reaches majority age, the child is a dependent and will be supported by the parents.
Once the child reaches majority age, however, he or she may require the aforementioned governmental entitlements that are only available if one’s assets are below certain eligibility levels.
Accordingly, it is only at that point in time, i.e., when the child reaches majority age, that many people feel the need to establish a special needs trust. Nevertheless, special needs trusts are extremely versatile vehicles that can accomplish far more than protecting an individual’s access to government benefits. There are several reasons why parents should not have to wait until a child turns 18 to create such a trust.
The main reason to create a special needs trust before a child turns 18 is in order to provide stability and security for the child in case something happens to the parents.
This would be the same reason that parents of any children should prepare a comprehensive estate plan. In case something unforeseen happens to the parents, a plan will be in place to provide for the continued care of their loved ones.
If parents of a special needs child should die unexpectedly, a previously created special needs trust will allow their assets to be held for the benefit of the child in a way that offers optimal flexibility.
Parents of a minor disabled child may also want to establish a special needs trust so that other relatives or friends can gift funds to the trust for the benefit of the child. Further, older relatives who wish to leave an inheritance to the child can name the trust as the direct beneficiary.
Any funds gifted over the course of the beneficiary’s childhood will accumulate in the trust and will not imperil any benefits that such child would be entitled to once he or she reaches adulthood.
A special needs trust can also be created in order to purchase a life insurance policy for the benefit of the disabled child. Properly created trusts can hold the life insurance policies and manage the life insurance proceeds upon the parents’ demise.
Further, a trust can also be created in order to hold the ownership of a home for the benefit of the disabled child. Creating a trust when one’s child is a minor does not necessarily mean that the trust will be funded prior to the child’s turning 18. Nonetheless, the vehicle will be available and in place in case such a need arises. This is called a ‘standby’ special needs trust.
Consulting with an attorney who has an expertise in special needs planning can help parents create an individualized plan that will help maximize their children’s benefits.
Ronald A. Fatoullah, Esq. is the principal of Ronald Fatoullah & Associates, a law firm that exclusively concentrates in elder law, estate planning, special needs, Medicaid planning, guardianships, estate administration, trusts and wills. The firm has offices in Forest Hills, Great Neck, Manhattan, Brooklyn, and Cedarhurst, N.Y. This article was written with the assistance of Debby Rosenfeld, Esq., a senior staff elder law attorney with the firm. Ronald Fatoullah & Associates can be reached by calling 718-261-1700, 516-466-4422, or toll free at 1-877-ELDER-LAW or 1-877-ESTATES.
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