Estate Planning for Children with Special Needs

Planning for the needs of a disabled child can bedifficult.  One critical consideration isensuring the child will remain eligible for government programs like Medicaidand Social Security’s Supplemental Security Income Program.

A disabled person with over $2,000 in assets is barred fromthese programs.  Therefore, advisors mustensure there are no assets in the child’s name that would bar the child from anessential program.

Listing children as beneficiaries of trusts, wills, 529accounts, group health plans, 401(k)s, and pensions will serve to disqualify them.  A frequently-used approach issetting up a third-party, special-needs trust, which won’t disqualify a childbut will place rules on how the money is used. A good way to fund these trusts is with the proceeds from asecond-to-die life insurance policy, which lessens premiums.

See Elliot M.Kass, Estate Planning for Clients withDisabled Children, Financial Planning, Sept. 30, 2013. 

Special thanks toJim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringingthis article to my attention.