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Caring for disabled adults with a special needs trust

Washington families who have a disabled child often have a special difficulty when planning their estates. Most parents want to preserve some assets for the next generation, but providing money for disabled adult children can interfere with the government benefits that go to disabled people.

For example, if a disabled son requires $100,000 in care every year, Medicaid will pay about 80 percent of that, while the parents pick up the other 20 percent. However, to receive the Medicaid, the son must have no significant assets of his own. This requirement may not interfere with the situation while the parents are alive, but it could be a problem after they pass away. If they leave a large amount of money to him in trust, it could render him ineligible for Medicaid, while also not providing enough to pay for his care for the rest of his life.

The answer to this problem is sometimes called a special needs trust. A special needs trust follows special procedures to ensure that the adult child continues to be eligible for Medicaid.

There are many types of trusts which can be tailored to reflect situations such as the example above, and not all of them require special circumstances such as a disability. A spendthrift trust, for another example, is a relatively common type of trust that is designed to ensure that the beneficiaries don't blow their inheritance all at once.

Whatever their needs and circumstances, Washington parents can seek help understanding the options for preserving their family's assets and providing for the next generation. A qualified Washington estate planning attorney can help them to come up with a solution that will bring some measure of financial security for the beneficiaries and peace of mind for the parents.

Source: Wall Street Journal, "Estate Plan Preserves a Disabled Son's Benefits," Alex Coppola, Dec. 2, 2013

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