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Financial planning for adult children with special needs 

Estate planning is crucial for parents with a special needs adult child. It ensures that the child is cared for and financially secure after the parents can no longer provide support. 

For parents in this situation, understanding the options and implications of different estate planning tools is key. This knowledge helps create a plan that secures the child’s future and maximizes their access to essential services and benefits.

Special needs trusts and their benefits

One of the most critical tools for a special needs adult child is the special needs trust, which is part of a comprehensive estate plan. This trust allows parents to leave assets to their child without jeopardizing their eligibility for government benefits like Medicaid or Supplemental Security Income.

A trustee manages assets in a special needs trust to benefit the adult child. The trust can be used to pay for expenses not covered by government benefits, such as personal care, education or recreation. By using a trust, access to public benefits is preserved while additional resources for their care and quality of life are provided.

Choosing the right trustee

Selecting a trustee is critical in setting up a special needs trust. The trustee should be someone trustworthy, financially savvy and familiar with the unique needs of the beneficiary. Some families opt for a professional trustee, such as a lawyer or a trust company, to ensure ongoing management and compliance with legal requirements.

Life insurance as a financial tool

Life insurance can be a strategic part of estate planning, especially for parents who may not have substantial assets to leave. A life insurance policy can fund the special needs trust, ensuring sufficient resources are available for the child’s care over their lifetime.

Understanding how estate planning impacts eligibility for government benefits is crucial. Parents should seek guidance on structuring their estate to maximize the child’s access to these benefits. This often involves working with individuals familiar with special needs planning.