Do you have a special needs child? Have you come to realize the importance of advanced planning? Are you concerned that you’re making mistakes that could affect them in the future?
There’s a lot that goes into special needs planning, such as creating a special needs trust. But not everyone goes down this path. Instead, some people make the mistake of relying solely on direct gifting.
While this sounds like the easiest way to pass assets along to your child, it’s a big risk.
Once your child reaches legal age, they will have to qualify for state and federal financial assistance programs on their own. This can help with things such as housing, healthcare coverage, and monthly income.
Here’s what you need to remember: eligibility for these benefits is determined largely by your child’s resources and income. And for that reason, direct gifting is a big no-no.
Direct gifts made while you’re alive or after your passing will lead to an increase in resources. Subsequently, it could push your child’s resources past the program limits, thus leading them to lose eligibility.
Is that a risk you’re willing to take? Of course not. And that’s why special needs planning is so important.
Rather than opt for direct gifting or leaving assets to your loved one in a will, create a special needs trust. By doing so, you’re not giving assets directly to your child, but instead leaving them in a trust for future use. As a result, these assets don’t count against your child’s resources.
It’s likely that you have concerns about what will happen to your child upon your death. This is natural, but it’s also something you can plan for.
Contact us if you have questions about special needs planning, special needs trusts, direct gifting, and/or other related subject matter.