Rethinking Asset Distribution in Estate Planning for Families with Special Needs 

Estate planning for a family with a child with special needs requires more than just dividing assets equally among your heirs. In many cases, the unique needs of a child with special needs may call for unequal distribution of assets to ensure that each child receives what they need to thrive. However, there are situations where more assets may need to go to your other children, particularly if your child with special needs already has sufficient financial support. 

 Here are some examples to illustrate both scenarios—where unequal distribution favors your child with special needs, and where it makes sense to direct more assets to your other children. 

 When More Resources Should Go to Your Child with Special Needs 

 A higher percentage of resources should go to your child with special needs when there are more limited resources AND: 

1. An Increased Financial Need Compared to their Siblings 

A child with special needs often has increased financial needs compared to their siblings. These may include ongoing medical care, therapies, educational support, and possibly full-time caregiving, which may extend into adulthood or throughout their lifetime. Allocating more resources to this child can help cover these expenses without burdening their siblings. 

2. Your Other Children are Financially Stable 

Your other children may be fully capable of supporting themselves as they grow older, establishing careers, and managing their own finances. If they are financially independent, it may make sense to leave a larger share of your estate to your child with special needs, who may not have the same opportunities to generate income or manage their financial future independently. 

3. To Relieve the Caregiving Burden from Siblings 

If your other children take on caregiving responsibilities for their sibling with special needs, an unequal division of assets can help alleviate some of that burden. By providing more financial resources for your child with special needs, you can reduce the long-term financial or emotional strain on your other children. 

 When More Resources Should Go to Your Other Children 

 There are also situations where your child with special needs may have ample resources available from other sources, and a larger portion of the estate can be left to your other children. Here are some examples: 

1. Adequate Government and Private Benefits 

If your child with special needs qualifies for government programs like Medicaid, Supplemental Security Income (SSI), or state-based disability services, and these benefits cover most or all of their needs, you may not need to leave as large a portion of your estate to them: 

• A child with moderate disabilities who receives government-funded housing and medical care, or is part of a well-funded special needs program, may already have the core aspects of their care covered. In this case, the focus can be on maintaining their quality of life with a relatively smaller trust, while the remaining assets are distributed to other children, who may be starting families, buying homes, or paying off student loans. 

2. Existing Trust or Funding for Long-Term Care 

If you’ve already funded a Special Needs Trust for your child, or they have access to a well-funded trust established by grandparents or other relatives, they may already have more than enough financial resources for the future. For example: 

• A child with a special needs trust that includes contributions from extended family or life insurance policies may have enough resources to cover their lifetime care. With those financial assurances in place, you may feel more comfortable allocating a larger share of your estate to your other children for their educational, career, or family-building needs. 

3. Inheritance of Assets or Property 

If your child with special needs stands to inherit other significant assets—such as property, investments, or annuities—from other sources, they may not require as much from your estate. For example: 

• A child who is the designated beneficiary of a life insurance policy or has been left a family home may already have substantial resources to cover their future. In such cases, more assets may be directed towards your other children, especially if they have growing financial needs such as starting businesses or purchasing homes. 

Communicating the Decision with Your Family 

 Regardless of whether you choose to direct more assets to your child with special needs or to your other children, open communication is key. Discussing your reasoning with your family, particularly with your children, can help prevent misunderstandings and hurt feelings. It may also give you a chance to explain how your decisions were made with the best interests of each child in mind. 

 Ensuring Fairness, Not Just Equality 

 Ultimately, your goal is to provide for the well-being of all your children—not necessarily to divide your estate equally. Unequal distribution doesn’t mean you love one child more or less than the others; it simply reflects the differing needs of each of your children. By thinking carefully and planning thoughtfully, you can ensure that each child receives the resources necessary for their unique life circumstances. 

 Feel free to reach out if you’d like to explore options for structuring an estate plan that ensures the long-term care of your special needs child while maintaining fairness for all your heirs. 

*The foregoing content reflects the opinions of Van Hulzen Asset Management DBA "Van Hulzen Financial Advisors" and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.