How much do you need to put aside for a special needs child?

On Behalf of | Apr 15, 2020 | Special Needs, Disability And Long-term Care Planning |

Having a child with special needs means that you will have unique concerns when it comes to planning for their future. Most parents can simply make a last will naming a guardian for their minor children and allocating their valuable assets to their kids after they die. For parents of children with special needs, however, there will be much more to do if you want to ensure an adequate standard of living for your child after you die. 

Many families bridge the gap between what they can provide and what the state will provide through the creation of a special needs trust. If you intend to create a trust, it’s important to understand how much money do you need to set aside and what assets could preclude your child from getting the benefits they need.

How much you set aside is often less important than how much your child owns

Many experts helping families plan for the future of a special needs child will recommend funding a trust with at least $100,000 to cover expenses the child’s needs and expenses related to the administration of the trust itself. Although it is possible to create a trust with total assets that have a substantially lower value than $100,000, aiming for at least six figures of assets can ensure enough for a nest egg left behind for a child who likely won’t learn substantial wages on their own.

What you put in the trust may actually wind up being less important than what your child owns in their own name. Generally speaking, in order to get Medicaid or other important government benefits that can help your child with special needs live semi-independently as an adult, they will need to have less than $2,000 in assets in their own name. 

Limiting what you give them as far as financial assets and thinking carefully about how you invest any real estate that you hope to pass on to your special needs child to make a big difference in whether or not they have access to those government benefits later in life. An experienced estate planning attorney can help you make your plans.