Should Your Children Support Their Disabled Sibling?

Some parents choose to avoid the complication of creating a special needs trust by leaving their estates to one or more of their healthy children, relying on them to use the funds for the benefit of their disabled sibling. This is not a solution that will protect your child because it creates great risks to the security of the funds in the trust.

What Can Go Wrong?

• What if your child with the money divorces? Their spouse may be entitled to half of it and will likely not care for your special needs child.
• What if your child with the money dies or becomes incapacitated while your special needs child is still living? Will their heirs care for your special needs child as thoughtfully and completely?
• What if your child with the money loses a lawsuit and has to pay a large judgment or has other significant creditor problems? The court will certainly require your child to turn that money over to the creditor.

The Burden of Obligation

In addition, this can create a burden for the child or children holding these "morally obligated" funds. Can they spend them on themselves or their family? If so, how much belongs to each? This approach can also create rifts among the other siblings, as some may spend the funds for their own needs and not their sibling's unique needs.

Aside from budgeting responsibly, do your other children understand the eligibility requirements for government benefits their sibling may be receiving? These funds can be critical for the daily support of your child. Losing them could put additional financial stress on everyone.

Special Needs Trusts

Except in the case of a very small estate, the share of your estate going to your child with special needs should be placed in a trust for their benefit. A trustee controls the funds, so they won't be counted toward asset and income limits in government benefits programs.

The money in the trust can be used to improve your child's lifestyle without jeopardizing eligibility for benefits, such as Supplemental Security Income (SSI) and Medicaid, which may be necessary to maintain your child's health, support, and living arrangements.

Special needs trusts also protect the funds from lawsuits, creditors, and other financial risks that come from family members who can't or won't assume any responsibility for their sibling with disabilities.

You Don't Have to Make Decisions Alone

The best time to start special needs planning is now. However, professional advice is recommended over developing any DIY legal documents on your own. Find a local special needs planner and explain your unique situation. They can help determine which type of special needs trust you need, help to set it up, and provide options to fund it to achieve your goals for your child's future.