Caring for a child with special needs is often quite different than traditional parenting. Children with special needs may require far more medical intervention and support than the average child. The cost of caring for them can be higher, as they may require specialized child care. Care obligations may persist indefinitely, they may not be able to live independently once they become legal adults.
Parents have to think carefully about how they can meet the needs of a child with special needs now and in the future. A special needs trust is a powerful tool for those hoping to support a child with special needs. What do parents need to know about creating a special needs trust?
There are many ways to fund a trust
Quite a few parents mistakenly believe that a special needs trustis not an option for their families. They may not have the resources on hand to immediately fund a sizable trust. However, there are a variety of ways to fund a trust for a child who requires lifelong support.
Some parents name the trust the beneficiary of a life insurance policy. Other times, the trust can become the legal owner of the family home, which can provide both financial resources and a secure place to live or the child. Parents can also potentially fund the trust in increments while the child is young so that the resources available are robust by the time they reach adulthood.
Trusts can help protect benefit eligibility
Many children and adults with special needs rely on a variety of state benefits. From housing support to Medicaid coverage, many of those benefits are only available to those with limited personal resources. A large inheritance or major gifts provided by parents could make a child ineligible for the benefits that they require. Parents can structure a special needs trust to ensure that distributions do not affect benefit eligibility.
The right trustee makes all the difference
Choosing the person to administer this trust is as important as properly structuring and funding it. Parents frequently serve as the first trustee of a special needs trust. That responsibility may then pass to another family member or a trusted family friend. A trustee not only has access to and control over trust resources but can also play an important role by offering social support and practical guidance to the beneficiary.
The sooner parents start planning a special needs trust, the better their chances of having a positive impact on their child. Sitting down to discuss support needs and resources with a skilled legal team can help parents begin the trust creation process.