Question: I have two daughters, one of them has special needs and receives benefits. I have been told that I have to disinherit them from my will so that if something happens to me they won’t lose these benefits, is that true?
Answer: No, it is not correct that you must disinherit your daughter. However, it is important when drafting your will or other estate planning documents to make certain provisions so that, at the time of your passing, any inheritance will be protected from state or federal recovery and more importantly, will not disqualify your child from receiving those benefits in the future. The best way to accomplish this is to ensure that any money or property that is left to your child is left in a Supplemental Needs Trust “SNT” (also sometimes referred to as a Special Needs Trust). The idea behind this trust is that any money left under the terms and conditions of a properly drafted SNT can be used to supplement rather than supplant government benefits. Any individual who is receiving need-based benefits, such as Medicaid, SSI, special housing or programs, will not be in jeopardy of losing those services so long as their inheritance is left to them pursuant to this trust. You would designate a third-party trustee who would administer the funds the trust for the benefit of your child. It is important to note that in the event your child is receiving SSI, any monies expended from the trust for shelter or food could reduce the monthly SSI payment your daughter receives.
Oftentimes we meet with families who have been counseled that they must disinherit their child who is disabled or who has special needs for fear of these children losing their government sponsored benefits. In fact, it is often those children who need their inheritance the most. A third party SNT created for the benefit of a disabled individual not only provides the family a way to include their disabled child in their estate plan but can also provide the disabled individual with an enhanced quality of life. The assets in the trust can be used to provide the disabled individual with comforts they would otherwise not be able to afford. Because these trusts are set up with the funds of a third party, unlike the first party SNT, they do not have a payback provision. Upon the death of the original beneficiary of the trust, whatever assets remain in the trust can be distributed in accordance with the Grantor’s wishes.
A SNT is an invaluable planning tool for those who have a loved one with a disability. Careful estate planning with a professional who regularly assists families with Special Needs beneficiaries will ensure that you provide for your daughter without putting her benefits in jeopardy.
-- Robin Burner Daleo, Esq. and Nancy Burner, Esq.