If your child has physical or mental health concerns that result in special medical and educational needs, he or she may need extra support even as an adult. Providing for your child with special needs in your estate plan can give you peace of mind in case you can no longer care for him or her.
Review these estate planning considerations for parents with a child who has special needs.
Letter of intent
This document can accompany your will to detail the type of life you would like your child to have in your absence. You can include information about living arrangements, personal care, medical needs and anything else that would be useful to someone caring for your child. Attach a copy of the letter of intent to your will and share it with trusted family members and friends.
Special needs trust
When you create a trust for a child who has special needs, you transfer assets for his or her care to the ownership of the trust rather than having the child directly inherit assets. This strategy may preserve your child’s eligibility for Medicaid and other disability benefits while ensuring that he or she can live comfortably when you are gone. You can appoint a trustee to manage the funds on your child’s behalf, whether a trusted family member or a professional fund manager.
Creating this trust and associated estate planning documents early in your child’s life can help your heirs avoid probate. It can also provide a larger financial cushion since the appointed trustee can invest the funds during your lifetime for your child’s eventual benefit.