How to Leave an Inheritance to an Adult Child with Special Needs

Leaving an inheritance to an adult child with special needs can be a more complex process than leaving assets to other family members. The primary concern lies in how to provide financial

support without disrupting eligibility for government programs such as Supplemental Security Income (SSI) or Medicaid. These benefits often play a central role in covering healthcare, housing, and daily living expenses. If an inheritance is mishandled, it can unintentionally disqualify an adult child from receiving the assistance they depend on. That is why it is important for families to understand the options available and to create a plan that balances both financial security and continued support.

Why a Direct Inheritance Can Create Challenges

When a parent passes away, leaving money or property directly to an adult child with special needs might seem like the simplest solution. However, even a modest inheritance can create complications. Government benefit programs usually have strict income and asset limits. If your child suddenly receives money outright, their financial resources may rise above those limits, which could cause them to lose access to programs that provide essential medical coverage and services. Once those benefits are disrupted, it can be extremely difficult to get them reinstated. The money left behind may not last long enough to cover the same level of care and support that government programs provide, leaving your adult child in a vulnerable position. Because of these risks, most families look for better strategies that safeguard both the inheritance and the benefits.

How a Special Needs Trust Can Protect Your Adult Child

A common solution is to use a special needs trust, which is designed specifically for this type of situation. A special needs trust allows parents to leave an inheritance to an adult child with special needs without giving the assets to them directly. Instead, the funds are placed into the trust, which a trustee then manages. The trustee is responsible for making distributions from the trust to pay for expenses that improve the child's quality of life, such as medical treatments not covered by insurance, education, recreational activities, transportation, or personal care items. The trust might pay for transportation services so your child can get to work or community events, or it could cover classes and hobbies that enrich their daily life. Because the trust owns the assets and not the individual, they are not counted against the child when determining eligibility for government assistance. This ensures that your adult child can continue receiving the benefits while also enjoying the added security and opportunities that the trust provides.

Choosing a Trustee and Planning for the Future

Selecting the right trustee is one of the most important decisions in this process. The trustee will be responsible for managing the funds, keeping detailed records, and following the rules that govern how money in the trust can be used. Some families choose a close relative who knows the child well, while others appoint a professional trustee, such as an attorney or a financial institution. Whoever you choose should be reliable, organized, and committed to making decisions in the best interest of your adult child.

To illustrate how important this choice can be, consider two scenarios. In one case, a sibling acting as trustee might pay for a trip that allows your adult child to participate in activities tailored for individuals with special needs. In another case, a professional trustee might carefully budget for long-term expenses, ensuring that funds last for decades. Either way, the right trustee can make a meaningful difference in how well the trust supports your child’s future.

Once a trust is established, the next step is deciding how to fund it. Some parents choose to transfer savings, investments, or property into the trust.

The Importance of Legal Guidance

Planning for an adult child with special needs involves many moving parts, and the rules can be complicated. Working with an attorney who has experience in this area is highly recommended. A lawyer can help set up the trust correctly, explain what expenses the trust can cover, and make sure that the inheritance plan complies with state and federal laws. They can also guide you through other important steps, such as updating your will or considering conservatorship arrangements if your adult child may need additional support with decision-making. Regularly reviewing your estate plan is also wise, as changes in laws or your family’s financial situation could affect the best way to provide for your adult child.

Creating Peace of Mind for the Future

Parents naturally want to make sure their adult child will be secure and supported long after they are gone. By learning how to leave an inheritance to an adult child with special needs, you can take steps that both protect government benefits and create a financial safety net.

Work With Johnson McGinnis Elder Care Law & Estate Planning

At Johnson McGinnis Elder Care Law & Estate Planning, we understand the unique challenges families face when caring for a loved one with special needs. Our team can help you create a plan that preserves your adult child’s government benefits while ensuring they receive the financial support and opportunities you want for them. Whether it’s establishing a special needs trust, updating your estate plan, or simply answering your questions, we are here to guide you through the process with clarity and compassion. Planning today means peace of mind for tomorrow, and we are ready to help you take that step forward. Contact us here, and a team member will reach out to you to help address your concerns and questions.