The importance of creating a special needs trust

| May 31, 2016 | Estate Planning

All parents, somewhere in their minds, recognize that they will not always be around to care for their child(ren). Many parents hope that by the time they are no longer around, their children will be sufficiently independent to care for themselves. Parents of children with special needs are not always able to share that hope. In order to help ensure that children with special needs will be financially provided for as they get older, parents of special needs children may want to consider setting up a special needs trust.

Trusts of all sorts are commonly used in estate planning. A trust can be composed of any assets, though property and money are the two most commonly used to fund a trust. While trusts can be managed by the people who created them, they are usually managed by a third party, a trustee. The person who ultimately receives the assets held in the trust. Trusts are most commonly created for tax reasons, though there are plenty of other reasons to create a trust.

Your loved one with special needs is likely eligible for government assistance, subsidized housing, Medicaid and other resources. If, however, he or she comes into a substantial sum of money or property, via an inheritance, for example, he or she may no longer be qualified to receive those necessary support funds and services. Trust assets, however, will not disqualify your loved one.

It is important to word a special needs trust correctly. For instance, a special needs trust should state that the trust funds are to be used to provide support over and above that provided by the government. The trust document requires references to specific parts of particular manuals and explanations about exceptions. A lawyer knowledgeable about setting up special needs trusts can help you create a trust that will ensure your loved one is well-provided for.