When a Family Member Needs Extra Help

Parents continue to worry about their children long after they’ve left the nest, but that is especially true for parents of children with special needs.  Special needs trusts, which hold assets without jeopardizing any federal and state benefits, have long been a part of the estate planning options available to parents.  Often, the trusts are left unfunded during the parents’ lifetimes, with life insurance or other assets passing to the special needs trust at the parents’ death.

But couldn’t parents simply leave assets to other children, knowing they will care for the child with a disability?  One drawback to that is that assets held by a sibling are subject to the claims of their creditors in the event of bankruptcy, divorce or litigation.  Or the siblings may die “out of order,” resulting in the disabled child either inheriting the funds or having them pass to other beneficiaries.

Some parents who have established special needs trusts find that a charitable remainder trust is a thoughtful way to augment the resources available for the child.  For example, the charitable remainder trust can make payments for life to the child’s special needs trust, which will hold the funds for future needs.  At the child’s death, the special needs trust may even be structured to distribute remaining assets to charity, similar to the charitable remainder trust.

The language used to create a special needs trust must specifically state that the trust’s purpose is to provide “supplemental and extra care.”  An estate planning attorney can explain the features of a special needs trusts and draft the necessary documents.


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Contact Information

Joe Woodward
Director of Institutional Advancement
(909) 482-5220
jwoodward@webb.org

 



The materials contained on this website are intended only to show some ways by which you can make a charitable gift or bequest and thereby minimize federal tax liabilities, as authorized by the Internal Revenue Code. All examples are of a general nature only and should not be applied to your specific situation without first consulting your attorney or other advisers.