Preparing Your Estate When You Have a Disabled Heir
Estate planning will take some time, especially when you have significant assets and a number of heirs. When you have an heir that is disabled, such as in the case of an adult child of yours, leaving money directly to the individual can cause issues. While you may want to leave a percentage of your estate equally to each of your children, doing so without the help of an attorney can cause your disabled adult child to lose benefits and services they are receiving. You can leave money and assets to the non-disabled heirs directly while setting up a special needs trust for your disabled heir.
How Money Is Distributed
When it comes to planning your estate and taking care of the future needs of all of your children, it is important to know how each person will inherit. You can give the proceeds of a life insurance policy directly to one heir, or divide it up by percentages. When you do this, the money doesn't go through probate and goes directly to the heirs. If you want to leave a percentage of a policy to a disabled heir, this will need to go into a special needs trust.
If Property Is Involved
You can leave property to anyone you want, or leave it to your estate to be liquidated. When you want to leave an equal percentage of money to your heirs, liquidating your estate is going to be the fairest way to do it. The special needs trust will be set up for your disabled heir, which will have parameters for how the money is used. For your other heirs, each can get their money once the estate is settled.
Understanding a Special Needs Trust
When you have an heir who receives public assistance such as Medicaid, or Social Security Disability benefits, there are limits to what they can have in the bank. If you leave money directly, their benefits will stop. This will cause a disruption in necessary services while the money issues are figured out. When you set up a special needs trust instead, the money is there for your heir for supplemental purposes and is not designed to replace any existing support.
You can leave money to a disabled heir, but you have to be smart about it. Don't risk a suspension of their current benefits by leaving direct cash. Talk with your lawyer about options when it comes to dividing up your estate equitably.