The Top 5 Estate Planning Mistakes for Parents of a Special Needs Child

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June 30, 2023

The Top 5 Estate Planning Mistakes for Parents of a Special Needs Child

Estate planning is a critical process that involves making important decisions about how to distribute assets after death. It is especially important for parents of children with special needs or disabilities, as they need to plan for their child’s future care and financial security.

Unfortunately, many well-off parents make estate planning mistakes that can negatively impact their child’s future security. In this article, we will discuss the five most common estate planning mistakes made by parents of special needs children.

Mistake #1: Failing to Plan for a Child’s Lifetime Needs

One of the most significant estate planning mistakes that parents make is failing to plan for their child’s lifetime needs. Parents often assume that the government will provide for their child’s needs. However, this is not always the case―at least not without careful planning.

Parents should work with an attorney who specializes in special needs planning to create a comprehensive plan that accounts for their child’s lifetime needs. This plan should address issues such as housing, medical care, and daily living expenses.

Mistake #2: Not Setting Up a Special Needs Trust

A Special Needs Trust is a type of trust that is designed to provide for a person with special needs or a disability without disqualifying them from receiving valuable government benefits such as Medicaid or Supplemental Security Income (SSI).

Parents often make the mistake of leaving assets to their child directly, which can disqualify them from receiving these vital government benefits. This means that the child will need to spend-down their inheritance on their personal care before receiving SSI. By setting up a special needs trust, parents can ensure that their child’s needs are taken care of while still allowing them to qualify for government benefits.

Mistake #3: Failing to Update Estate Plans

Estate plans should be updated regularly to reflect changes in a family’s circumstances or the law. Unfortunately, many wealthier parents fail to update their estate plans, which can result in unintended consequences. For example, if a child is born with a disability or develops a special need after an estate plan has been created, the plan may not adequately address their needs. Parents should review and update their estate plans at least every three years or whenever there is a significant life event.

Mistake #4: Not Communicating with Family Members

Estate planning can be a complex and emotionally charged process. However, it is important for parents to communicate their wishes with family members to avoid misunderstandings or disputes. Parents should discuss their estate plans with their children and other family members to ensure that everyone understands their intentions. This can help to prevent disputes and provide peace of mind for all involved.

Mistake #5: Not Working with Experienced Professionals

Estate planning for a special needs child or a child with a disability can be complex and challenging. It is essential to work with skilled experts, including attorneys, financial planners, and accountants, who have significant experience in special needs planning. These professionals can help parents create a comprehensive plan that meets their child’s needs and protects their financial future.

In conclusion, affluent parents with special needs children or children with disabilities must be diligent in their estate planning efforts. By avoiding these five common mistakes, parents can ensure that their child’s needs will be taken care of and that their financial future is secure.

With careful planning and the guidance of experienced professionals, parents can provide for their child’s needs and provide peace of mind for their entire family.

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