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Q: How can having a special needs child impact a parent’s estate and retirement planning?

It’s no secret that having a child with special needs often presents parents with financial and other challenges. Unlike other parents whose financial responsibility to their children generally ends in their early 20s once they’ve left the nest, special-needs parents often house and provide financial support throughout adulthood – – sometimes until their own passing.

Therefore, parents must consider their special needs children when doing their retirement and estate planning and should seek advice from a skilled New York and New Jersey estate planning attorney.

Retirement planning with a special needs child

They may need to factor in the additional expenses of supporting their grown special needs child– in addition to themselves– after they retire. Depending on the severity of the child’s disability, these expenses can be substantial. Further, once parents begin collecting Social Security retirement benefits, their special needs child may also qualify for disability benefits of generally half of the parents Social Security retirement benefits provided their disability began before the age of 22. This may impact the parent’s decision on when to begin collecting Social Security retirement benefits.

Estate planning with a special needs child

Many special needs children are entitled to Social Security disability benefits through either (or occasionally both) of the Social Security Administration’s disability benefits programs: Social Security Disability Insurance “SSDI” or Supplemental Security Income “SSI”. Each program has its own qualifying criteria, with the former being based on a work credits history and the latter being means-based.

In order to qualify for SSI, the special needs child must have extremely limited income and assets in their own name. So, keeping assets intended for their benefit out of their individual name requires special planning. A skilled estate planning attorney can discuss the benefits of a special needs trust and how to fund it.

An inheritance in a will left directly to a special needs child individually– instead of to a special needs trust for the benefit of that child—may result in the child losing their SSI government disability benefits if the inheritance pushes the child’s income and assets over the limits of the program. The same thing can happen if parents die without an estate plan and if the special needs child would be entitled to a share of the estate through their state’s intestacy laws.

Using a special needs trust commonly safeguards those government benefits and allows parents to leave their disabled child money in a trust that can be used for the child’s benefit after they’re gone. Income from the special needs trust can supplement their government benefits providing a better quality of life for the child for the duration of their life, rather than them having to get by solely on disability benefits.

If you need assistance with an initial estate plan, a special needs trust, or any other estate planning matter, the experts at Merlino & Gonzalez can help you. Contact us today to schedule a consultation.

From our offices in Staten Island, New York and East Brunswick, New Jersey, we represent clients in both states in all aspects of estate planning and estate administration.