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How your estate plan could affect your child’s SSI benefits

Published on July 12th, 2013

Let’s say you’re a parent of a special needs child. Like most parents, you want the best for your child and would do anything for them to make sure that this happens. Although they may be collecting Supplemental Security Income benefits at this time, they are probably still financially dependant on you to provide them stability. But what happens when you pass away? Will their SSI benefits be enough to provide them with the same stability they once had when you were alive?

If you’re like most aging parents here in Illinois who have disabled children this is probably something you’ve been thinking about quite a lot. You may have already considered setting aside a large inheritance for your child in an effort to give them financial security. But while estate planning is a good idea, knowing how your child’s inheritance can affect their disability benefits could save them from losing them down the road.

It’s important to point out that while you may think that leaving a large inheritance is helping your special needs child, it can actually count against SSI and Medicaid thresholds, meaning that monetary safety net is actually disqualifying them from receiving future benefits down the road. In order to prevent this from happening you may want to establish a special needs trust instead. The money in this secure fund does not count towards SSI and Medicaid thresholds and can be tailored specifically to each person’s individual situation too.

Another important thing to remember is that establishing a special needs trust is not a project you should take on yourself. The laws associated with these kinds of trusts can be tricky and sometimes complex; even a small miswording could affect whether your child can collect future government assistance. Speaking with a lawyer about this can greatly increase your chances of establishing the financial security for your child that you want without interfering with their current SSI benefits in the future. A plan we’re sure you will be more pleased with in the end.

Source: The Fiscal Times, “Estate Planning Guide for a Special Needs Child,” Sonya Stinson, July 10, 2013

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