Estate planning involves extra considerations when you are the parent of a child with special needs. If you are not careful when creating your estate plan, you risk having the assets you leave behind disqualify your child from receiving certain need-based government benefits, such as Medicaid or Supplemental Security Income. 

Many parents of children with disabilities work around this by establishing third-party special needs trusts. 

How a special needs trust protects your child 

A third-party special needs trust gives you a means through which to leave your son or daughter assets to cover future medical, living or care expenses without jeopardizing his or her government assistance eligibility. The government does not consider the assets in the special needs trust when assessing your child’s eligibility. So, this gives you a safe way to set aside money for your child without causing other potential problems. 

How a special needs trust helps you distribute other assets 

Another reason you may want to consider a third-party special needs trust is that it lets you dictate how you want remaining assets distributed after your child’s death. Another type of special needs trust, the self-settled special needs trust, requires you to pay back any Medicaid benefits your child received during his or her lifetime. 

However, with a third-party special needs trust, you do not have to make this reimbursement. Instead, you may name other beneficiaries or even charities that you want to receive whatever remains in the trust after your child’s death. 

Planning a lifetime of care for your child with special needs may prove timely and complex. Yet the more careful and thorough you are, the better your chances of maximizing how much you leave behind and enhancing your child’s quality of life. The rules governing special needs trusts undergo frequent change, so it may benefit you to have someone well-versed in these areas guide you through the process.