Parents often face the dilemma of how to best support a child with special needs after their death. In these cases, the child is likely unable to handle his or her financial affairs. Additionally, parents do not want their child to become disqualified from receiving assistance from government programs such as Medicaid. Proper planning allows parents to maximize the support available to a special needs child by supplementing the government benefits that he or she is otherwise entitled to receive.
Parents of a special needs child have several options to consider:
Disinherit the Child
Disinheriting a child will prevent him or her from being disqualified from receiving government benefits. While this preserves the family’s wealth, a child’s quality of life will likely suffer from the loss of family resources.
Bequest to the Child
Making a bequest directly to a child allows assets to be used for a child’s support. This commonly occurs when a child’s special needs are not addressed in the estate plan. This approach is undesirable because a child may not be able to handle his or her finances and the resources may disqualify the child from receiving government benefits.
Bequest to a Family Member for the Child’s Benefit
Making a bequest to another family member for the support of a special needs child is sometimes seen as a simple way to avoid government benefits disqualification. This approach, however, also has several pitfalls:
