Should I Consider A Special Needs Trust For My Child?
This is a very important question. I would suggest that all of us need to consider a special needs trust for our children even if they do not have any disabilities. The truth of the matter is we don’t know what tomorrow holds for our children. They may be healthy or they may not. They may be thriving in business or they may be suffering from a serious setback that we never expected. For these reasons, I strongly suggest that every estate plan include a provision that allows the trustee or the executor to create a special needs trust in the event that a beneficiary is incapacitated or appears to be insignificant danger of becoming incapacitated.
The value of such a provision is that it can allow a disabled beneficiary to receive government benefits that would otherwise be unavailable because of his or her inheritance. You can improve the quality of life that your child experiences while allowing him to continue to receive all of the available government benefits.
When Should I Create A Special Needs Trust?
My office puts the provision for a special needs trust in every asset protection trust that we create. We create these trusts for people who want to be sure that their children are never completely without funds to meet their needs. If your child is healthy now, that trust may never be funded. However, if the need is there when are gone, you will already have done the work to create this trust in advance. There is no extra charge for that assistance.
What Funds Can We Put Into Our Child’s Special Needs Trust?
There are two different kinds of special needs trusts under the law. One such trust must be funded with assets belonging to the incapacitated person. The other, and much more popular trust, is funded with money that never belonged to your child. When correctly drafted, such a trust can provide for your child after you are gone. You can decide in advance who will inherit any remaining funds after your child passes away.
Who Will Manage Our Child’s Trust?
This is where we will need to have a serious discussion about your family members. You will need to find someone who is young enough that they can be expected to be in good health when the time comes to act as trustee. They also need to have some life experience and knowledge of how to handle money. You will want to find someone who does not have difficulties handling their own money, someone who has not had criminal charges filed against them, and someone who is not in a weak marriage. These, among others, are issues that can seriously distract the trustee from caring for your child. We will make a very serious effort to nominate the correct person as the trustee for your incapacitated child.
Can We Just Give The Money To The incapacitated Child’s Siblings To Use For The Incapacitated Child’s Benefit?
Sometimes that works, but often it does not work. The child who receives the money can pass away, become ill, go into a nursing home, get a divorce, or get involved in a lawsuit. Perhaps they will have difficulties with the Internal Revenue Service or the Oklahoma Tax Commission. In any of these situations, the money you set aside for your incapacitated child may not end up going where you intended it to go. Instead of handing the money to a third party to take care of your incapacitated child, I would strongly urge you to create a special needs trust in advance. The money in that special needs trust will not be subject to your incapacitated child’s debts or the debts of your other children. Even if your incapacitated child loses a lawsuit and has to pay a medical judgment or other bills, the money in your special needs trust will not be subject to that debt.
What Happens If An Incapacitated Child Just Inherits The Money Directly?
The answer to that can be somewhat discouraging. For example, if your child is receiving Medicaid assistance, he or she will no longer be eligible to receive their medical care through Medicaid. They might lose their nursing home care, they might lose the coupon that provides for their daily care. There are many facilities that only accept patients who are receiving Medicaid assistance or other government funding. If the child is no longer eligible to receive that benefit, they can be forced to move at a terribly inconvenient time.
For more information on Special Needs Trusts In Oklahoma, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (405) 754-4166 today.
Call For Our Free Probate Book Or To Reserve
Your Seat At Our Free Estate Planning Workshop