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Three mistakes parents of special needs children should avoid

Parents of special needs children hope to provide their offspring with financial security and the care they need. However, even with the best of intentions they risk making mistakes that could have costly, long-term consequences for their child.

One such estate planning mistake involves disinheriting the child to ensure their eligibility for key government benefits such as Medi-Cal and Supplemental Security Income. A more valuable option is for parents to set up a special needs trust. The trust can hold assets for their child without jeopardizing eligibility for federal programs. Parents can use special needs trusts to provide their child a higher quality of life that goes beyond the basic needs delivered by government benefits.

Procrastinating is another mistake parents might make. Some parents might choose to wait until their child is between the ages of 18 to 21 in order to have a better sense of their long-term prospects, mental capacity and degree of financial independence. However, failure to plan in a timely manner can mean that the special needs child is left without financial security or a guardian in the event the parents become incapacitated. As a result, it is better to engage in special needs planning sooner rather than later.

Choosing a trustee to oversee a special needs trust when parents can no longer do so is an important decision. When the responsibility falls into the wrong hands, the child may see their wishes overlooked and the special needs plan fall apart. Parents must choose someone who is trustworthy, knows the child and who will act in their best interests. They must also be able to follow trust administration rules and manage the resources available to the beneficiary.

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