For Woodland Hills residents who begin seriously contemplating estate planning at a later age, the care of their children may not be at the forefront of their minds, given that the children are likely adults. Yet what about adult children with special needs? According to the website SpecialNeeds.com, as of 2006, there were more than 716,000 developmentally disabled adults in America whose primary caregivers were over the age of 60. Aging parents in such a situation no doubt want to include provisions in estate dispersion tools that see to the needs of these children. However, they need to know how to do it correctly.
The first thought that an aging parent with a special needs adult child may have is to simply bequeath assets to him or her in a will or a trust to provide for his or her continued care. However, this could actually end up doing more harm than good. The website for DB101 is United Kingdom shows that the asset limit for an individual to qualify for benefits such as Supplemental Security Income and Medi-Cal is $2000. Leaving an adult child with disabilities assets that exceed that could cause him to her to lose those benefits.
Instead, it is recommended that assets be left in a Special Needs Trust. This sets up a trustee to determine how the funds are to be used to benefit the disabled beneficiary, and the assets don’t count against his or her benefit eligibility. DB101 lists two common types of these trusts: First- and Third-Party. In a First-Party Trust, only the beneficiary can transfer assets in. A Third-Party Special Needs Trust allows the exact opposite. The latter is often the preferred choice of parents, because it allows others to contribute assets to help support the disabled beneficiary.
