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Home >> Estate Planning Articles >> Special Needs Trusts for Children with Down Syndrome

Special Needs Trusts for Children with Down Syndrome

May 13, 2015 by Robert Kulas.

Compliments of Our Law Firm,
Written By: The American Academy of Estate Planning Attorneys

Every year, about 6,000 babies with Down syndrome are born in the United States. Over their lifetimes, many of these children will contend with serious medical conditions including heart defects, gastrointestinal problems, visual or hearing impairment, dementia, and early-onset Alzheimer’s disease. As a result, the costs associated with Down syndrome can be astronomical and many of those with the condition receive public benefits, such as Medicaid or Supplemental Security Income (SSI).

All parents want their children to be happy and to enjoy long-term financial stability, and parents whose children have Down syndrome often believe the best way to accomplish this is to leave money to their children using a Will, a life insurance policy, or a retirement account. However, leaving money directly to the child can disqualify him or her from receiving much-needed benefits. For example, under SSI rules, a recipient is limited to $2,000 in assets. If a recipient has property valued more than this amount, his or her benefits are suspended until those assets are “spent down” below the $2,000 threshold.

This means that the unintended consequence of an inheritance or even a big gift from grandma could result in a loss of valuable benefits.

What is the best way to plan for long-term financial security for your child? One solution is to establish a Special Needs Trust.

Under the terms of a Special Needs Trust, a Trustee manages trust property to ensure that it will remain a long-term source of funds for the child. The Trustee has discretion to distribute trust assets to (or on behalf of) the child, as long as he or she follows strict rules that forbid the use of Special Needs Trusts for any of the services covered by government benefits. In a nutshell, Medicaid and SSI benefits continue to cover the basics, while trust assets can be used to provide a child with the “extras” that enhance quality of life.

Often, parents opt for a Special Needs Trust that goes into effect when they die, but this isn’t the only choice. You can also establish a trust that takes effect during your lifetime. There are a number of advantages to establishing such a trust. For instance:

  • Substantial gifts to your child from grandparents and other family members can be paid into the trust without fear that they’ll interrupt your child’s benefits.
  • Funds you have earmarked for your child’s care can be transferred to the trust. After the transfer, they’ll be treated as separate assets – not yours and not your child’s. This way, the funds will be out of reach of your creditors and safe in the event of divorce. The Trustee you’ve selected will manage them on behalf of your child, so you can rest assured the funds will be put to their best possible use.

For more information about Special Needs Trusts, talk to an experienced estate planning attorney. He or she can help you sort through all your options and establish a comprehensive plan that meets the needs of your child and your entire family.

Kulas & Crawford

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Everyone treated us extremely well.  Robert explained how a trust works and the benefits of having one.  We decided to move forward and complete the process.  He was very kind and knowledgeable.  Julie was also very helpful and very patient with our questions.  We felt very comfortable with this firm handling our affairs.  We would highly recommend this firm to our friends and family.

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"Everyone treated us extremely well.  Robert explained how a trust works and the benefits of having one.  We decided to move forward and complete the process.  He was very kind and knowledgeable.  Julie was also very helpful and very patient with our questions.  We felt very comfortable with this firm handling our affairs.  We would highly recommend this firm to our friends and family."

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Janice M
Client Review
August 25, 2020
    

Robert Kulas and staff made making a will an easy to understand process. They were very knowledgeable and attentive to my wishes. All my documents were provided in an organized binder which will be a great asset to my family. I would definitely recommend them.

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Krissy L.
Client Review
August 25, 2020
    

I have worked with Mr. Kulas & staff before. And they are very professional. I am very satisfied with Mr. Kulas and his staff and give them the highest satisfaction and 5 star rating.

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Leo C.
Client Review
August 25, 2020
    

Mr. Kulas and his staff have been extremely helpful & knowledgeable for the over 3 years we have been associated. They are easy to talk to and explain everything without feeling rushed. Very competent and professional.

default image
Mildred W.
Client Review
August 25, 2020
    

I have known Robert Kulas for 20 years since I was co-executor for friends who had Mr. Kulas prepare a Trust for them. When I felt I needed a trust also, I came to him. I have always been completed satisfied with his work and that of his charming, competent staff.

default image
Joan C.
Client Review
August 25, 2020
    

We began our estate plan process in 2004 (12 years ago) and have been pleased with the periodic reviews we have gone through and when changes have been needed the firm has been thorough and professional in making those changes.

default image
L.G.K.
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