A concern that occupies the minds of many New Yorkers as they formulate strategies for estate planning documents is how best to handle children. This is compounded when the child has physical or mental issues that make their care exponentially important. If the child will need minor or major assistance to live his or her life after a parent or guardian is gone, this must be accounted for in the estate plan and done so cautiously and comprehensively. A key factor is structuring such documents as a special needs trust in a way that the person will maintain eligibility for benefits from the government.

Various aspects must be considered as this process moves forward. One that is frequently overlooked is the beneficiary designation in a retirement plan. With a beneficiary designation, there are options to pass the inheritance to loved ones. It is possible to name a primary, secondary and a contingent beneficiary. It is even possible to designate beneficiaries as a group. While this can be useful, it can be complicated when there is someone with special needs who must be accounted for.

A special needs child receiving assets from retirement funds or from anywhere else can cause problems if they are getting financial help from the government. An example might be a child who receives Medicaid and gets help with daily activities. The goal of leaving the child money to help could lead to the child having too many assets to qualify for Medicaid. Knowing the amount to leave and how to do it properly is imperative. A special needs trust can avoid these complications as it will be supplementary to the government assistance. Any retirement plan can be put into the trust and used to benefit the child.

The special needs trust is just one aspect of an estate plan that people should be aware of. Formulating wise strategies to help loved ones is a goal with an estate plan. A legal professional who understands the numerous factors that go into estate planning can assist with all situations, especially if there is a person who has special needs.

Source: forbes.com, “How To Create A Financial Plan For A Child With Special Needs,” Mark Eghrari, Aug. 30, 2017