Parents usually want to provide for their children, including those with special needs. However, leaving a large inheritance directly to an adult child with special needs can cause major problems.
This approach might seem like the best way to ensure financial security. However, it can lead to unintended consequences. These outcomes can undermine the child’s long-term well-being and financial stability.
Impact on government benefits
Many individuals with special needs use government programs such as Supplemental Security Income and Medicaid. These programs have strict income and asset limits.
If an adult child receives a large inheritance directly, they might become ineligible for these benefits. Losing access can be a major blow. These programs often provide medical care, housing assistance and other vital services. Regaining eligibility can be a complex and lengthy process, leaving the individual without necessary support in the interim.
Financial management challenges
Managing a large sum of money can be overwhelming for anyone, but it poses unique challenges for individuals with special needs. Some may lack the financial literacy or the capacity to handle substantial funds responsibly. This can lead to mismanagement or exploitation by others, resulting in the rapid depletion of the inheritance.
Emotional and social consequences
A large inheritance might create an imbalance in relationships, both within the family and with others. Siblings or other relatives might feel resentment or jealousy. Additionally, having a significant amount of money without the skills to manage it can cause stress and anxiety for the individual with special needs, potentially exacerbating their condition.
Long-term concerns and solutions
Long-term financial security for an adult child with special needs requires careful planning. Parents should consider financial strategies that provide consistent support throughout the child’s life.
Estate planning approaches such as special needs trusts, guardianships or conservatorships, ABLE (Achieving a Better Life Experience) accounts, structured financial gifts and life insurance policies are some possibilities.
Parents can explore these alternative methods to the various challenges of providing support. Proactive planning goes a long way.
