Making estate plans for your special needs child can be a complicated matter. Not only does your child need food and housing, but you should also plan for whatever care your child needs. Ironically, if you pass too much money on to your special needs child, your loved one could become ineligible for government benefits.
This is just one example of a potential mistake you could make while making your estate plans. Fortunately, learning about possible pitfalls may help you to avoid them. U.S. News and World Report explains four different mistakes to be aware of as you make your estate plans.
Automatically making a child a trustee
If you have set up a special needs trust to provide for your child, you might want one of your other adult children to serve as trustee. This is a matter you should discuss with your trustee pick first. Some adult children have no interest in running a trust even if it is for a sibling. Also, your child might not have the skills to handle the trust. Another relative or a close friend of the family might be a better choice.
Naming a child as a beneficiary
If your special needs child receives government benefits, you have to be careful that your child does not receive too much in assets or your child may become disqualified for government assistance. This might happen if you designate your child as a beneficiary on your accounts or insurance policies. However, by naming a special needs trust as a beneficiary instead, the government will not count the money as belonging to your child.
Not discussing estate plans with children
When a child has special needs, dividing your estate can be more challenging since that child could require a larger inheritance to pay for care and services. This unequal division from your estate might cause some resentment or tension among your other children. Discussing these matters with your children may help them to understand your decisions to give their special needs sibling more resources.
Failing to take action
After you have finished composing your estate plans, do not let them gather dust on the shelf. Some parents go through the trouble of estate planning but hesitate to put their plans into practice. For instance, a parent may create a trust but neglect to place assets into the trust. This can result in an unfunded trust. There should be a commitment to follow through with these ideas so they can go into practice when the time comes.