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How to Provide For a Disabled Child?

estate planning for disabled child

If you have a disabled child, creating a comprehensive estate plan that builds in protection and provision for their future financial and care needs is critical. One of the biggest concerns for parents and families with a child with special needs is how to provide for their child.

James Nici is a top Naples estate planning attorney who has helped families like yours plan for the future properly for children with special needs. In this post, let’s go over some basic points he would recommend.

A Special Needs Trust (SNT)

One of the best ways to provide for a disabled child in Naples is through a special needs trust (SNT). An SNT is a trust designed to protect and hold assets for physically or mentally disabled or chronically ill person to receive income without reducing their eligibility for the public assistance disability benefits provided by Social Security, Supplemental Security Income (SSI), or Medicaid.

Funds can provide for things such as physical therapy, medical treatment, education, entertainment, furniture, and travel.

What are the Benefits of a Special Needs Trust?

Below is a list of three of the top benefits of creating a special needs trust in Naples:

1. Your Child Maintains Eligibility for Public Benefits. For many disabled individuals, access to government benefits, such as Social Security Income (SSI) or Medicaid, is critical to their care. To be eligible for most government benefits, participants must be below certain asset and income limits. Property placed in an Special Needs Trust does not count towards eligibility requirements.  Therefore assets you can provide for your child can be available for your child without putting them at risk of losing their SSI or other government benefits.

2. The Trust Assets Must Be Used As You Intend. When you create an SNT, you must name a trustee responsible for managing and distributing the trust assets. The trustee must distribute the assets as you outlined in the SNT. The trustee will protect your child if they cannot handle their finances independently. Additionally, it provides a safeguard from dangerous predators looking to prey on vulnerable individuals.

3. The Trust Assets Are Protected from Creditors. Your creditors and any creditors of your disabled child will not be able to reach the property in an SNT. For example, if your child is sued in a personal injury lawsuit, a judgment creditor cannot seize the property in the SNT.

How Can You Fund a Special Needs Trust in Florida?

Most parents understand that they want to set aside as much as they can to provide for their special needs child and avoid putting a financial burden for their care on other family members. So it is critical to fund the SNT with as much as they can for their child’s future when they are passed away and can no longer do so directly.

One option, if you do not have a significant amount of property to transfer into the trust, is to use a life insurance policy. You can establish a life insurance policy that will pay directly into the SNT. The beneficiary of the policy must be the SNT, not your child.

Also, SNTs can be funded through contributions from multiple individuals. Family members and relatives can contribute to an SNT up to specific monetary limits without triggering the gift or generation-skipping tax.

If your disabled child won a settlement in a personal injury action, you should strongly consider having the payout directed to an SNT so your child remains qualified for public benefits.

Again a good attorney can explain how to fund your trust. James Nici can help you assess how to make contributions and fund your SNT. He can also discuss selecting the trustee and develop the guidelines for how the trustee will distribute the assets to your child.

Choosing a Guardian for Your Disabled Child

In addition to creating an SNT, your estate plan should designate a guardian and conservator for your disabled child. The guardian will be responsible for making personal and medical decisions on behalf of your child. A conservator will manage their financial affairs. Your estate planning attorney should be able to help you make these decisions.

Florida ABLE Account

ABLE accounts are bank accounts that allow disabled individuals to save money without jeopardizing their government benefits. While money in a traditional bank account would count towards the asset limit used to qualify individuals for disability benefits, ABLE account funds are exempted. Unlike a Special Needs Trust, there is no named trustee of the ABLE account. The disabled individual manages the account.

It was the intent of the Florida Legislature to establish a qualified ABLE program in this state which will encourage and assist the saving of private funds in tax-exempt accounts in order to pay for the qualified disability expenses of eligible individuals with disabilities. It made sense to enable families to use their money to support their child without penalizing or disincentivizing this action, by making them ineligible for needed government services like SSI and Medicaid.

Call James Nici – Your Naples Estate Planning Lawyer

If you have questions about providing for your disabled child, you should contact us at Nici Law Firm. James Nici is an experienced Naples attorney with over 25 years of experience and is familiar with special needs trusts and related guidance for protecting and providing for your child.  He understands that parents know they will not live forever and how they will enjoy peace of mind taking actions to provide for their disabled child. He is well-versed in these issues as well as all aspects of estate planning including wills, asset protection, and probate. Contact our office today at (239) 449-6150 or use our web form to set up a free consultation.

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