Americans of all ages use estate planning tools to designate what happens to their assets after death. As the parent of a disabled child, you may also want to use your estate plan to continue to provide care for your son or daughter. You do not want a cash gift to interfere with your child’s eligibility for government benefits, though.
Means-tested government assistance, such as Supplemental Security Income, requires recipients to have limited income. If you set up a supplemental needs trust, you do not transfer money directly to your son or daughter. Instead, the trust maintains funds for your child’s benefit. This approach ensures your child’s continued eligibility for financial help from government programs.
Generally, for a supplemental needs trust not to interfere with needs-based benefits, aid recipients must not use funds from the trust to pay the same expenses government assistance does. For example, rent, basic medical care, utilities and food are often impermissible uses for disbursements from a supplemental needs trust.
Nevertheless, the supplemental needs trust may pay for supplemental expenses that may immediately improve your child’s quality of life. These usually include the following:
- Medical copays and housing modifications
- Educational and vocational expenses
- Recreational, athletic and hobby costs
The supplemental needs trustee
Your supplemental needs trust has a trustee to oversee it. This individual owes a fiduciary duty to your disabled son or daughter. Consequently, the trustee works to ensure your child continues to be eligible for needs-based programs.
More importantly, the trustee may connect your son or daughter with the services he or she needs to thrive. If your primary estate planning goal is to continue to provide for your child after your death, the supplemental needs trustee may help you achieve it.