Parents of children who have special health needs must develop an estate plan that facilitates necessary care and support when they are no longer able to do so. Many families strive to provide their child with a monthly income that comfortably covers expenses without jeopardizing eligibility for Social Security Insurance and Medicaid programs.
If you have a child who has special needs such as developmental delays, explore the role of a special needs trust in your estate plan.
What is a special needs trust?
When developing an estate plan, consider a special needs trust if you think your child will qualify for government benefits that cover housing costs and medical care after turning 18. An attorney can draft this trust to maximize the value of these benefits while adding supplemental monthly income for your child.
What are the benefits of a special needs trust?
In addition to preserving your child’s eligibility for disability benefits, a special needs trust provides the peace of mind of having a trustee. You appoint this individual to manage your child’s funds, which is helpful if your child cannot do so independently.
The special needs trust structure can also prevent the legal problems that may arise with an informal arrangement. For example, if you leave money to your brother with the understanding that he will care for your child with special needs, you have no legal assurance that the arrangement will go as planned.
How do I form a special needs trust?
You can either fund this type of trust now with existing property or cash, or establish an empty trust that will become active upon your death. With the latter option, designated funds from your life insurance coverage, a different trust or your estate create the special needs trust.
An attorney with experience in estate planning can answer your questions about a special needs trust. A smart strategy can ensure that your child receives the necessary financial and practical support through adulthood.