When doctors diagnose a child with special needs, parents usually understand that they’re facing a challenging process. Not only will they need to fulfill all of the same basic obligations as any other parent, but they’ll also have to consider the long-term implications of their child’s condition.
Children with special needs may never become as independent as those without medical challenges. They may not be able to live on their own and support themselves through work. Parents have to consider what their children may experience as they mature, including what might happen after their parents die. Funding a special needs trust is a way to enhance independence during adulthood and to provide ongoing support when the parents of an adult child with special needs die.
How can concerned parents acquire adequate funding to provide ongoing support for their child with special needs?
Many funding sources are available
People who have enjoyed intergenerational wealth or who are highly successful in their own careers may have the resources on hand to provide direct funding for the trust at the time of its creation. They can use specific financial accounts or investment holdings to fund the special needs trust.
It is also common to make arrangements for the home where the child with special needs lives to transfer to the trust either at the time of trust creation or upon the passing of the parents. That way, the child can continue living in the same environment indefinitely and remain connected to their social support system.
When people do not have enough capital to fund the trust immediately, they can make alternate arrangements. Naming the trust as the beneficiary of a life insurance policy is a common tactic. After parents die, the payout for their life insurance policy can become the primary funding for the trust.
People can also make arrangements to fund the trust over time based on their income and current investment holdings. The best solutions depend on the family’s resources and circumstances, but even those without tens of thousands of dollars in resources to commit can establish special needs trusts.
The support needs of a child with special needs and the unique financial circumstances of their family influence the best funding solutions for a special needs trust. Reviewing goals and resources at length with a skilled legal team can help parents provide their children with special needs with financial stability and the support of a trustee when they can no longer offer direct support.