If you have an adult child who has a disability, setting up a special needs trust may be a top priority. This estate planning tool provides money for your son or daughter without harming his or her eligibility for needs-based government assistance, such as Medicaid or Supplemental Security Income.
A special needs trust may only pay for the special needs of the beneficiary, rather than ordinary living expenses, like housing, utilities or essential medical care. Expressed differently, funds from the trust may pay for items that improve quality of life.
If your son or daughter qualifies for Medicaid, the program is likely to cover basic medical costs. There are other medical expenses that Medicaid typically does not cover, however. Disbursements from the special needs trust may pay for supplemental medical expenses, including the following:
- Out-of-pocket medical care and co-pays
- Special medical equipment, such as prosthetic limbs
- Rehabilitation, therapy or counseling
Your son or daughter may want to pursue an education, participate in a training program or take hobby-related classes. While needs-based government programs typically do not provide funds for these expenses, a special needs trust may pay.
Funds from the special needs trust may also pay for many recreational expenses, such as travel costs, electronic devices, video games or sporting goods.
When planning your estate, you may want to devote some attention to providing for your disabled child after your death. Because a special needs trust may cover recreational costs and other expenses that make life worth living, setting up one may be in your adult child’s best interests.