You were extremely happy when you had a child, but you were caught off-guard when your child developed a life-long illness. He’ll never be in the “normative” classification, and the likelihood that he could ever care for himself is low. Fortunately, there are options for people like yourself who want to make sure your child is cared for even if you pass away.
A good option for your family is a special needs trust. This kind of trust is designed for the benefit of disabled or mentally ill beneficiaries. For instance, if your child has Down Syndrome, the special needs trust can address his daily expenses, extra needs and long-term care.
Why choose a special needs trust?
There are several reasons to choose special needs trusts. These three reasons may make a major difference in your child’s life, so consider them carefully.
1. They limit income and assets
If you’re asking yourself why you’d want to limit your child’s access to income or assets, the answer is simple: Limiting access to assets gives your child a better chance to continue collecting Supplemental Security Income, subsidized housing, vocational rehabilitation and Medicaid. Someone with a lump sum of money may no longer qualify for these services, which are essential in your child’s life.
2. A trustee controls the assets
Another thing to keep in mind is that a special needs trust is run by a trustee. This person is in charge of the trust and may manage the funds as you ask. Since this person has control over the funds, you can even give him or her some leeway in what he or she does. For instance, you might allow your child to obtain more money on certain milestones or for particular purchases.
3. Trusts can be set up to accept settlements and inheritances
Another great thing to remember is that trusts can be set up to accept other funds. For example, if your wife or husband passes away and leaves money to your child, that money can funnel directly into the trust. As an added benefit, your child’s funds won’t ever be accessible in the case that he is sued or subject to a judgment, because the funds aren’t considered to be directly his to access and use.
Trusts have many benefits to consider, with these three being some of the most important. Your child may not understand how to manage money well, or perhaps you just want to shield him from losing government benefits. Whatever the case, a trust for special needs is a good option.