While adults of any age can benefit from starting estate planning sooner than later, many wait until they have kids, get divorced, remarried or for other transitional stages in their lives before they begin. If there's anyone that shouldn't wait to plan their estate, parents of special needs children top on the list.
When a parent has a special needs child, they have to plan early on for who would take over guardianship of their child if something were to happen to them. They have to plan for their financial future as well.
It's key for them to make sure that the assets their child inherits never exceeds the lifetime exclusion amount of $11.18 million. If they do, they put their ability to receive Security Supplemental Income (SSI) or Medicaid at risk.
One way to protect your dependent child's financial interests in the future is by setting up a special needs trust (SNT).
By setting up a SNT, you can continue providing financial support for your dependent without jeopardizing their ability to qualify for government assistance. It also shields them from having creditors file claims against them. This can protect them from New York landlords, credit card companies and others looking to garnish the limited financial resources that they have.
As with any other trust, an SNT must be managed by at least one trustee. The person appointed to this role may be a trusted professional such as an attorney or financial planner or a family member. This individual often manages the trust alongside the grantor until the grantor's death.
Setting up an SNT isn't ideal for every family. While it may protect the assets of someone who wins a court settlement, owned their property before the onset of their disability or receives an inheritance, there are situations in which setting up other trusts may be more appropriate. An estate planning attorney can help you plan for the future.