For those with loved ones faced with special-needs, concern over their future welfare creates special considerations when planning an estate. The extra cost that care incurs is often the driving factor when planning and can result in unequal distributions to cover the extra cost which could lead to problems among heirs that would otherwise share equally. Another common problem is that special-needs heirs are often receiving government benefits such as social security or medicaid. These benefits are usually means tested and would be lost if a recipient was to come into money as a result of an inheritance. However, there are ways around these problems including taking out life insurance specifically for the special-needs heir, and splitting the estate equally, and using trusts to hold an inheritance avoid losing benefits. But every situation is different so if faced with this situation be sure to consult with an advisor to formulate the best plan to protect a vulnerable loved one.
See Henry E. Klosowski, Estate Planning When You Have a Special-Needs Child, The Wall Street Journal, March 27, 2016.
Special thanks to Jim Hillhouse for bringing this article to my attention.
