Have You Planned Effectively for Your Child With Special Needs?

As a parent of a child with special needs, there are many things that you worry about, but the one thing that could potentially have the biggest effect on your child’s future seems to get overlooked.  What I’m talking about is the legal and financial aspect of our child’s future.

One of the most important things that parents want to do is get their child qualified for SSI and Medicaid.  This is what’s going to provide your child’s health care.  When your child is under age 18, the state looks at the parents income and assets to determine eligibility.  Once your child turns 18, they’re considered an adult even if you still provide 100% of the care for your child.  Parents always try to do the right thing, and many times they put money aside for their child either in a savings account or some type of investment.  If the money is in your child’s name, and it is more than $2,000, they will not qualify for SSI and Medicaid.  That’s right! $2,000 is the limit.  Remember, that $2,000 applies for as long as your child is on SSI and Medicaid.  If your child is on benefits and ever exceeds the $2,000, they can be kicked off benefits and have to pay back the state.  Here is an example:  Johnny gets on benefits when he turns 18 and the parents do a good job of keeping money out of his name.  When Johnny is 40 years old both his parents pass away.  They thought they did the right thing and put Johnny as the beneficiary of all their life insurance, investments, etc.  Johnny receives $500,000 from the inheritance.  Here’s what happens.  Johnny gets kicked off benefits because he now accedes $2,000, and now has to pay back the state for what he has received.  He’s been on benefits for 22 years and lets say he receives around $20,000 a year between SSI and Medicaid.  $20,000 times 22 years is $440,000 he has to pay back.  He know has maybe $60,000, has no idea how to manage it and has no benefits.  I think Johnny is in big trouble.

There is a simple solution.  A properly structured legal and financial plan.  A special needs trust will protect the assets you want to leave  for your child as well as benefits.  The solution is simple, the problem is the information can be difficult to find.  Consulting with a special needs financial advisor is your best option.  When selecting an advisor, make sure they are an expert in dealing with families with special needs children.  They will have an attorney that they work with that specializes in this area as well.  If you have any questions you can reach me at jeff@projectwingsresourcecenter.com, or jeff@jeffrupp.com