Having a family member with a physical or mental disability can present some unique challenges. Caring for these family members requires careful planning and consideration. Parents are especially concerned with ensuring that a disabled child will be provided for at all times.
A special needs trust can offer a viable solution for parents looking to plan ahead for the care of a disabled child.
One of the reasons a parent might opt to set up a special needs trust is to offer access to financial assets without compromising their disabled child's benefit status. Disabled individuals are entitled to many different types of government aid. The aid received is dependent, in part, on the financial status of the disabled individual.
If a parent were to give their disabled child a lump sum of money, that child's access to government aid could be revoked. A special needs trust is designed to benefit a disabled child without transferring ownership of any assets over to the child. This maintains the child's income status, allowing government aid to continue.
Name a Trustee
Another reason that parents of disabled children consider establishing a special needs trust is to appoint a trustee to manage the assets within the trust. In the event that a parent passes away unexpectedly, someone will need to be responsible for overseeing the financial decisions of a disabled child.
A special needs trust gives the parents the power to hand over this authority to the individual of their choosing. Having a reliable trustee in place and a special needs trust funded prevents a disabled child from being taken advantage of in the future.
Most parents outlive their disabled children. This can create some concern that a disabled child will not have the financial assistance needed to maintain a high quality of life once the parents pass away.
Special needs trusts can preserve wealth by limiting the ways that the beneficiary can use the funds in the trust. A disabled child will not be able to spend his or her inheritance money on frivolous items, leaving plenty of money in the trust to cover living and medical expenses.
A special needs trust can offer you the peace of mind that you need when it comes to knowing that your disabled loved one will be cared for financially. Talk to an attorney about structuring a special needs trust that will meet the needs of your family.