Special needs planning is important, but what is equally important is that you keep any special needs trust that you have prepared up-to-date. Let’s start with what a special needs trust involves. A special needs trust is typically part of your own living trust that you set up for you or you and your spouse. The special-needs trust is a part of the trust and it addresses how the funds need to be managed or maintained for the special needs child over his or her lifetime. This special needs child is one that is typically suffering from a disability. Keep in mind that special needs children can be a minor child or a child well into their 50s or 60s. In most cases the special-needs child is receiving or could be receiving government benefits such as such as Social Security Income (SSI) and Medicaid. Leaving money outright to a special needs child is typically not a good idea for many reasons. If that child is eligible to receive government benefits such as SSI or Medicaid, a distribution of assets outright to them will affect their ability to receive those benefits. Most special-needs beneficiaries who are receiving these government benefits cannot have more than $2,000 in their account. Also keep in mind that special-needs beneficiaries may not have good money management skills and may have people take advantage of them if they know they have these assets. You need to make sure that your special needs trust allows for their inheritance to be held in trust for their lifetime and that it directs the trustee to use these funds for some of the comforts and luxuries that they will need over their lifetime.
Also keep in mind that if you have set up a special needs trust you shouldn’t just set it up and walk away from it for the rest of your life. You need to periodically go back and make sure that the terms of your trust still meet the needs of that special needs child. For example, if you have named one of your other children to serve as a trustee, you need to evaluate whether that other child is still capable of handling your special-needs child’s funds for a lifetime. Perhaps you need to consider if the relationship between the trustee and the special needs has changed. Finally, you may need to address whether or not you have left too much money in trust for the special needs child and those funds will never be utilized or needed and perhaps the division of assets between the special needs child and the other children should be different. You need to be especially careful that you don’t take the position that you will just leave everything to your other children and give them instructions to help out the special needs child as needed. Those children could face future bankruptcy issues, divorce issues or other money-management issues and asking them to “hold” your special needs child money is too big of a risk.