Estate planning is different for parents of young or adult special needs children. Not only must they consider their children’s daily needs, but they must also evaluate their long-term financial implications.
Special needs trusts provide an avenue for families to plan for the long-term care of their children.
1. Special needs trusts allow beneficiaries to collect government assistance
Caring for special needs dependents can be costly. Many families depend on government financial aid to:
- Receive medical insurance
- Access transportation services
- Have in-home caretakers
- Pay for nursing home care
Most of these programs have income restrictions, meaning the beneficiary would lose access to them if parents leave a substantial inheritance in a bank account. By putting the funds into a trust, the trust owns the assets. When government programs review eligibility, they can not consider the money held by the trust if that money covers items not covered by government programs.
2. Trustees manage the assets in the trusts
Beneficiaries of trusts may not have the resources to make intelligent financial decisions. With trusts, parents designate a trustee to oversee how beneficiaries can use the money. Trustees may release assets to help pay for medical care and other daily living expenses not covered by government programs.
3. Special needs trusts are irrevocable
Only beneficiaries can change the terms of irrevocable trusts. The advantage to this is that neither creditors nor winners of lawsuits can demand the removal of the money for their benefit.
Raising special needs children is expensive. Establishing special needs trusts can help parents feel reassured that their children can be financially stable when they can no longer care for them.