Stephen Cockriel Nov. 12, 2015

Children with disabilities can face various challenges upon losing their parents, especially if their disabilities make them dependent on full-time caregivers. One of the most significant issues for disabled individuals in California and throughout the nation is the potential loss of government benefits due to an inheritance. If a parent's resources are left directly to a disabled adult child, the child's resources could exceed amounts that qualify them for Supplemental Security Income, Medicaid or other forms of governmental assistance

To avoid causing a child's loss of these benefits, a parent may want to consider having a special needs trust created to manage substantial assets. Even a small inheritance could be enough to terminate some benefits, but a special needs trust is designed to administer assets on behalf of a disabled individual so that other benefits are not interrupted. The specific needs and conditions of the beneficiary would determine the details of importance in creating such a trust. In some cases, an individual may need constant care. In other cases, the beneficiary might have the ability to handle their own financial details.

A special needs trust limits the use of resources by the beneficiary. For example, that individual might use the funds for clothing or educational activities. However, these assets are not permitted for use on food or shelter. A caregiver could be paid out of the trust. However, assets such as a home in a special needs trust must primarily serve the needs of the beneficiary.

Because the needs of individuals with disabilities can be diverse, the details of a special needs trust should be designed for the specific situation in question. An estate planning lawyer with a background in serving the disabled community might be an excellent resource for evaluating types of trusts, administrators, and new ABLE accounts that are becoming available to manage relevant assets for disabled parties.