Wise Investing

Estate Planning for Parents of Children with Special Needs

When faced with the prospect of what to do with the assets they have accumulated during their lifetime, many people consider passing on their nest egg to their children. However, parents of children with disabilities will need to address additional considerations when determining how they will distribute their assets. One important consideration is how your children’s needs are currently being met. Children with special needs may currently be receiving health insurance coverage in the form of Medical Assistance from the Pennsylvania Department of Human Services. Perhaps your child is receiving assistance from the Social Security Administration in the form of monthly Supplemental Security Income payments. Or maybe your child receives in-home care or lives in a residential program that is paid for by Waiver Services. Any of these benefits could be reduced or discontinued if the child suddenly receives a large sum of money such as an inheritance.

Fortunately, there are several options available to ensure the money you have worked hard to save does not jeopardize the benefits to which your child is currently entitled. First, you could leave the inheritance to your child. However, this would likely reduce, or even completely eliminate, the benefits to which your child is currently entitled. Second, you could disinherit your child. However, this likely seems unappealing as many parents feel strongly that their financial legacy should remain to enhance their child’s life. If your child has siblings, you may choose to leave your entire estate to your child’s siblings, counting on them to provide for the special needs of their sister or brother. However, for some family members, the duties required of managing someone else’s finances may be too great a burden. This type of arrangement could become problematic if the sibling mismanages the assets. There is also the possibility the assets could become subject to the claims of the sibling’s creditors or a divorce agreement.

In order to ensure that your legacy is protected and remains to provide for your child as you intend, you should consider a Special Needs Trust. A Special Needs Trust can be used as part of an Estate Plan to hold an inheritance for the benefit of a child with special needs without jeopardizing their public benefits. Since the trust is a separate entity from the child, the assets are sheltered by the trust, enabling the child to remain eligible for public benefits.

Choosing the proper trustee for the Trust is one of the key decisions when setting up a Special Needs Trust. Naming a family member, such as one of your other children, may seem an obvious choice as they are likely similar in age and very familiar with the circumstances of the beneficiary. However, the personal relationship can sometimes create conflict as the Trustee makes tough decisions on the types of distributions that should be made. This type of awkward, strained relationship can be prevented by naming a Corporate Trustee, such as Univest Bank and Trust Co. A Corporate Trustee has the experience necessary to manage the assets. A Corporate Trustee also has a team of other professionals to navigate the complex system of public benefits and legal procedures to make certain that the necessary distributions are made to enhance the life of the beneficiary while preserving the assets of the trust for the remainder of their lifetime.

At Univest, we strive to provide strong, consistent communication with our clients, their families, and their care providers. Each client has a designated Trust Administrator who can be reached easily by telephone or email. With our local presence, we are able to personally visit many of our clients in their home, which helps the Trustee to better understand the client’s circumstances and build a strong relationship between the beneficiary and the Trustee. In many cases, a professional trust company, like Univest, is the best choice to handle your trust needs, whether a Special Needs Trust or otherwise. To learn more about the fiduciary services offered at Univest and have a conversation about your unique needs, please contact us at 215-721-2444.

Trust services are offered through Univest Bank and Trust Co. Products and services offered are not FDIC insured, are not a deposit of or are bank guaranteed, and are subject to risks, including possible loss of any principal amount invested.