Legal and Financial Planning for Your Children
If you or a grandparent plan to help your child financially, before or after death, you’ll have to make special arrangements. Because of the laws surrounding public disability benefits — benefits your adult child could need if his symptoms require hospitalization or prevent him from working — inheriting money could end up being a terrible burden rather than a safety net.
When your child’s 18th birthday occurs, you will no longer have the same legal control over him unless you’ve made prior arrangements. If your 18-year-old is still unable to safely care for himself, or if he becomes so at any time in the future, you will need to go to court to obtain legal guardianship.
In most US states there are three types of guardianship: full, limited, and temporary. Full guardianship is just what it sounds like: full authority over all decisions in the person’s life. Limited guardians have authority only in certain areas where the court recognizes the need for oversight. In your child’s case, this might be medical care, housing, or entering into financial contracts. Temporary guardianship is limited to a short period of time (usually 30 days) and for a specific purpose. You might be appointed as your adult child’s temporary guardian when he is hospitalized. Conversely, the court might appoint someone else as his temporary guardian.
There are other forms of legal status that you or another responsible person might want to hold for an adult child with a mental illness. These include power of attorney and medical power of attorney status.
Even if you and your child are both young, you should have a will to protect your estate. It doesn’t matter if you don’t have much to leave. Even furniture, an old car, or a modest home can have tremendous value to an adult whose earning power could be limited by illness.
You’ll want to consult a lawyer who understands disability inheritance issues. She can help you write a will that protects your child’s interests and helps him retain eligibility for needs-based services.
Special Needs Trusts
Special needs trusts can be part of your will. These trusts can make funds or real property (such as a home) available to an adult with a disability. Formally established in the US by the Omnibus Budget Reconciliation Act, special needs trusts are set up to keep the recipient eligible for government assistance, publicly funded health insurance, and subsidized housing if needed.
Money held in trust can be used to pay for items other than food, clothing, and shelter, such as education, phone bills, and recreation, without reducing benefits. If these funds are used for food, clothing, or shelter, a limited amount can be deducted from the SSI check.