Many parents of adult children with special needs worry about what will happen to their children when their parents are no longer around. North Dakota parents can take steps to ensure their children’s needs will be met after they die through their estate plans so that they can have peace of mind.
Estate planning for disabled children
Adults with special needs who are permanently disabled often depend on their eligibility for Supplemental Security Income, Medicaid, and other public benefits to cover their basic living expenses. While these benefits provide an important safety net for disabled adults, they might not be enough to cover all of their needs. Parents frequently fill the gap between what the benefits pay but worry about what might happen to their children when they are gone. Families can do a couple of things through estate planning to ensure their adult children will be provided for both while the parents are still alive and after they pass away.
ABLE accounts and special needs trusts
Two types of estate planning tools that can protect adults with special needs include ABLE accounts and special needs trusts. ABLE accounts are named for the Achieving a Better Life Experience Act (ABLE) and are tax-advantaged savings accounts that allow disabled adults to save up to $100,000 that won’t be counted towards their $2,000 limit for benefits eligibility. Withdrawals can be used to pay for qualified expenses, including the following:
- Employment training
- Personal care support services
Parents can also establish a special needs trust for their adult children with disabilities. Like an ABLE account, the assets held in the trust will not count towards the $2,000 limit for SSI benefits and can be used to meet the beneficiary’s needs on an ongoing basis after the parent passes away.