PLANNING FOR CHILDREN WITH DISABILITIES
40% of all individuals receiving long term care are under age 65. Many of these disabled individuals still have parents who are living, so when I discuss planning methods, I refer to them as “disabled children,” though many may be 50 years of age or older. In fact, with the advances in medicine and care giving, may disabled children can expect to live a rather normal life expectancy. Throughout their lives, they will remain dependent on government benefit programs, supplementing their income and providing them with medical insurance.
It is often the medical coverage that is the most important benefit they receive. Unable to obtain private health insurance, these needy individuals would be devastated by a loss of government-provided medical coverage.
There are government programs that provide disabled children with income and health insurance. Supplemental Security Income (SSI) will pay up to $530 per month for items such as food, clothing, and shelter. Medicaid will provide medical coverage. If the child qualifies for SSI, they automatically qualify for Medicaid.
To qualify for SSI, the child can have no more than $2,000 in countable assets. With certain exceptions, “countable assets” does not include items such as a house, personal goods and household effects, life insurance, and an automobile.
Oftentimes, the child will qualify for these government entitlement programs either because he is unable to work, or because he is unable to earn enough so as to be disqualified from the programs; however, the death of a parent can cause more than one significant problem for the child.
When planning to maintain government benefits, one of the most important issues to address is estate planning for the parents. Most people wish to leave a part of their estate to all of their children. It is their legacy, and people tend to feel strongly about this issue, no matter the value of their estate.
For them, the disabled child is no exception, and they believe – rightly so – that the child should not be excluded from their Will. Furthermore, because of the disabled child’s needs, the parents wish to ensure his financial security after they have died, as best they can.
If the parents leave a portion of their estate to the child – through a simple Will – the child will be disqualified from government benefits. All of the assets left to the child will then be spent on items for which the government programs were paying, and the child will not qualify for SSI/Medicaid until most of the inheritance has been spent.
To prevent this, the child’s inheritance can be left in a Special Needs Trust (SNT), contained in the parents’ Wills. The SNT is designed to supplement, not replace, government benefits. The SNT is drafted in such a way that it will not disqualify the individual from government benefits, yet the funds are available to the child to pay for items for which government benefits do not, or to pay for those items in such a way that the individual is not disqualified.
The law governing these programs is extremely complex. Quite literally, I could fill this entire newspaper with a discussion of government entitlement programs and Special Needs Trusts. Yet, from that entire discussion what would be learned could probably be boiled down to this one sentence: With proper planning, a legacy can be left to a disabled child that will better the child’s well-being by augmenting the benefits the child receives from government programs.
Long-term planning in this context often involves more than finances—it includes continuity of care, decision-making support, and stability over time. Because needs can evolve, flexibility and clarity both play an important role in shaping a plan that lasts.
Planning in this area often requires more than a single document or decision. It involves building a structure that supports care, preserves resources, and adapts over time. Taking a thoughtful approach can help create a plan that continues to serve your child’s needs well into the future.