Special Needs Trusts
Estate Planning Is Crucial for Ensuring the Future of Your Autistic Child

by Shannon King Nash, CPA

Jane and Mark Ramsey are an average family.* They have two kids - Jennifer age 12 and Jimmy age 3. Their
assets include a house valued at $200,000 (but with no equity), two cars together worth $15,000 and a $100,000 life insurance policy. Jane and Mark have a combined gross income of $100,000. They also have 401k plans and stock worth $35,000. Recently, they learned that Jimmy has autism. Since they aren't rich, they don't think they need sophisticated estate planning vehicles like special needs trusts, right?

The Ramey's need to think again. Every parent of a developmentally challenged child needs to invest
in careful planning to protect their child's future. The less the family has, the more tragic are the
consequences of a failure to plan.

What's the Big Deal?
Supplemental Security Income (SSI) is the federal needs-based program that many disabled children and adults may be eligible for if they meet certain income limits. SSI beneficiaries may also get Medicaid (medical assistance) to pay for hospital stays, doctor bills, prescription drugs, and other health costs. However, once a person's income exceeds $2,000 a year, they are no longer eligible for
SSI or Medicaid.

Over $13 billion is spent annually to care for individuals with autism. For the average affected family this
translates into $30,000 per year. Many parents believe that needs-based programs like SSI and Medicaid will take care of their child when they are gone. This is a common misconception.

Take our family the Ramseys. Jimmy's inheritance will have to be completely spent before he's eligible
for the needs-based programs. With Jimmy's half of his parent's estate (about $75,000), he will be forced to spend all but $2,000 of his inheritance before he becomes eligible for a single dollar of assistance. And he may be forced to spend most of this on health care expenses. At this rate, Jimmy will have exhausted his inheritance in less than three years. So much for the nest egg that the Ramsey's had hoped to leave.

Even families who believe their child won't need government assistance (for example, a family with a million dollars in assets) this could still be a problem. Their child will probably not be able to qualify
for private health insurance after the parents are gone and perhaps before depending on their
employer's health insurance policy. Medicaid might be the only way for their child to get needed
health care services. But this child will not qualify for Medicaid because of his huge inheritance. With people living longer and the costs for care of autistic people increasing, this huge inheritance will likely be completely spent long before the parents had hoped - leaving the child to spend his later days in poverty.

*The Ramseys are a fictional couple and are being used to illustrate some of the points in estate planning for special


1 | 2 | 3