“All parents worry about what will happen to their children after they die,” Janet Reynolds writes in Forbes. “Parents of adult children with a chronic disability have an additional concern: whether the child will have financial security.” We know. At Geyer Law, we’ve developed personalized estate plans for many Indiana families with an important goal being to offer ongoing protection for special needs adult children. While each family situation is unique, there are several elements to be considered when a physically or mentally disabled adult is involved:
If, due to illness or death, parents are no long able to care for their adult special needs child who is under guardianship, an appropriate successor guardian should be named. This successor guardian should be someone prepared to take on the responsibility of a special needs adult,ideally someone who will keep that adult’s lifestyle and future in mind. The successor guardian might be another family member or someone close to the family. Absent a person to take over the guardianship, a third party can be appointed by the court.
Special needs trust
Having a special needs adult child directly inherit money from parents is not a good idea if the child receives means-tested governmental benefits. An inheritance is a countable resources which could cause the child to lose eligibility for government benefits, including Supplement Security Income and Medicaid. With a properly drafted special needs trust, eligibility can be preserved. One way to fund the trust is to name it as the beneficiary of life insurance on the parent (if there are two living parents, second-to-die life insurance is a good choice.) Parents concerned with causing potential resentment on the part of siblings if they leave the largest part of their assets to a special needs adult child can “even out” the inheritances by channeling the insurance payout to the special needs trusts, dividing their other assets among the non-disabled children.
The ARC of Indiana
At Geyer Law, while we often help parents or grandparents set up individual special needs trusts, we also recommend they explore becoming part of a pooled trust through the Arc of Indiana. Not only are the membership and board of directors comprised of people who are sensitive to parents’ desires for their special needs adult children, this is a charitable fund that would continue to make payments to a special needs adult who had outlived his or her projected life span.
Veterans with special needs children
Veterans are now allowed to allocate pension payments to their survivors with special needs without fear that government benefits being received will be jeopardized.
If an adult child with a disability that began before age 26 establishes an Achieving a Better Life Experience account, he or she can put aside money they earn to use for their own future needs. Importantly, parents can contribute up to $16,000 a year to their child’s ABLE account without endangering the adult child’s government benefits.
At Geyer Law, we take special pride in helping families create estate plans that provide for the needs of a special needs adult child.
– by Ronnie of the Rebecca W. Geyer blog team