Many families struggle daily with the demands of caring for a family member with debilitating health or developmental challenges. Whether it is autism, cerebral palsy, birth defects, or some other debilitating condition, the challenges can be immense. Perhaps one of the more challenging aspects which these families face is making sure that resources are available to provide medical and other necessary benefits over the course of the family member’s lifetime. Often these families must turn to governmental programs such as SSI (Supplemental Security Income) and Medicaid to meet the overwhelming demands.
For example, take the situation where a child, age 6, suffers from autism. Depending on the circumstances, the family may only be able to get medical coverage through Medicaid. The special needs child could live many, many years and need benefits throughout that time. If the child lives 60 years, and the medical and other care bills for the child average $10,000 per year, then the benefits are huge and the family would not want to risk losing them!
Where many families fail to prepare is in the event the parents or other family members die and leave an inheritance directly to the special needs child. That inheritance could jeopardize the child continuing to receive benefits. These governmental programs are resource based, meaning they look at what assets or resources the person has available. If a special needs child has nothing and then suddenly inherits a lump sum directly, these inherited assets could disqualify the child.
As a result, families with special needs children on these governmental programs should have an experienced attorney set up a type of irrevocable trust (which is usually called a Special Needs Trust” or “SNT”). If this is done correctly, the inheritance monies can go into the SNT and can be available to provide for the child over his or her lifetime. So long as the SNT does not duplicate governmental benefits and otherwise complies with the limitations set forth by the applicable governmental programs, then the governmental benefits will continue uninterrupted.
A SNT is a complicated planning document which should be prepared by an attorney skilled and experienced in drafting these kinds of trusts. As with most estate planning documents, a SNT is not something you should attempt to do yourself.