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Experienced, Compassionate Legal Guidance For The Issues Of Aging

Would a third-party special needs trust benefit your child?

On Behalf of | Aug 8, 2019 | Firm News

If you have a child who has special needs, you may be looking for a way to continue providing for your child after you are gone. Traditional estate planning tools, like wills and living trusts, offer different ways for you to leave money to your children. However, estate planning can be a little more complicated if you want to provide for a child with disability.

Every situation is different, but a common concern with traditional estate planning tools is the possibility of inadvertently disqualifying the individual with special needs from other types of aid. For example, if someone with special needs inherits a large lump sum according to a parent’s will, the inheritance could make him or her ineligible to receive governmental benefits that have an income or asset limit.

Funds in a special needs trust can supplement government benefits

Leaving money to a child with special needs can be a little more complicated, but you can still achieve this estate planning goal. One way to do this may involve creating a third-party special needs trust.

A third-party special needs trust allows one or more people to leave money for your child in a trust. The money in the trust will then be managed by a trustee on behalf of your child.

The goal of this type of trust is to supplement the government benefits your child is eligible to receive. This allows governmental benefits to cover your child’s living expenses and other needs, while money from the trust can help your child maintain a comfortable standard of living that includes the means to afford a few extras.

A special needs trust can be created after your death via your will or as a subtrust within your living trust. You can also create it during your lifetime as a stand-alone trust.

A third-party special needs trust may not be appropriate for all situations. However, in the right situations, it can be an effective way to financially support someone with special needs, while protecting him or her from losing other types of support.