How to Create a Special Needs Trust for Your Autistic Child

Is it uncommon for autistic children to receive large sums of money?  Not really.  Grandparents, parents, and other relatives may provide for them in their will or trust. They may also be the recipient of a payout from a lawsuit, such as a birth injury lawsuit. Are you aware, however, that if your autistic child receives a large sum of money that eligibility for government benefits, including Medicaid and SSI, may be at risk? Creating a special needs trust can be a great tool for your child to be able to access this money, while not interfering with his or her eligibility for government assistance. 

A special needs trust is an estate planning tool where your child is not technically the owner of the assets held in the trust. The trust is the owner. This can allow your child to remain eligible for government assistance because the assets held in the trust will not be used in calculations for need-based government benefits. The added perk is that the funds held in the trust can still be used for certain qualifying expenses to provide for your loved one. This can be especially important, as autistic individuals have many special needs which are not covered by government programs. For example, money in a special needs trust could be used for the purchase and upkeep of a therapy dog.  

There are different types of special needs trusts. A first party trust is created with your child’s assets and your child as the only beneficiary. Your child’s assets, typically an inheritance or settlement funds, will be held in the trust and managed by a trustee throughout his or her lifetime. These trusts are generally irrevocable, meaning once they are created, they cannot be changed. It can also be important to note that Medicaid has a right to payback upon the death of your child for any benefits provided during your child’s lifetime.

A third-party trust holds assets provided by someone other than your child, with your child as the beneficiary. Third party trusts are not subject to the Medicaid payback, and upon your child’s death, the remainder of the assets can be left to another person. 

There may also be the option of a pooled special needs trust. This trust can be a great resource for families who have limited assets. In the most common scenario of a pooled special needs trust, a nonprofit organization runs a large trust in which your child would be a beneficiary with his or her own sub-account. The main benefit of the pooled trust account may be that the trust is managed by qualified social workers and money managers with limited cost to your family. Upon your child’s passing, the remaining assets are most typically distributed between the nonprofit organization and Medicaid payback.

While a special needs trust may be an excellent option, it can be vital that it is prepared according to the estate planning laws in your state and in accordance with both federal and state eligibility requirements for any government benefits your child receives. Utilizing an estate planning attorney with experience in the preparation of special needs trusts is a wise investment in your child’s future. For assistance in establishing a special needs trust for your autistic child, reach out to our office to schedule a meeting time.