Using a Special Needs Trust for a Child With a Severe Disability

If you are the parent of a disabled child, you are probably all too familiar with the expenses that come with a serious disability. The cost of special education, medical care, assistive devices, and other needs can be significant. 

For now, you may be able to cover these expenses by directly paying for your child’s needs. But what happens when you pass away and can no longer directly provide financial assistance to your child? A special needs trust is an estate planning tool that parents of disabled children can use to ensure their child has access to the funds they need even after the parent has passed away. Parents add funds to the trust and assign a trustee to manage and distribute the assets. After the parent passes away, the trustee ensures that the trust assets are used for the child’s benefit.  

How Does a Special Needs Trust Work and What are the Benefits?

As with any trust, a special needs trust begins with adding funds to the trust and designating a trustee to manage the assets. The trustee holds the assets and determines how they will be distributed for the beneficiary.

You may wonder why it is necessary to use a trust instead of simply leaving funds to your child through your will. Although a last will and testament can be used to transfer funds to a disabled child, doing so can sometimes come with unexpected consequences. Many public assistance programs are based on the recipient’s financial need. When a disabled person receives a sizable inheritance, this may disqualify him or her from receiving government benefits such as Social Security.

A special needs trust or supplemental needs trust provides funds, but the funds are not technically owned by the beneficiary. This means that the beneficiary may still be entitled to public assistance. These types of trusts are irrevocable trusts. The trust cannot be modified or dissolved after it is created, except in rare circumstances.

What Can Special Needs Trust Assets Be Used For?

The trustee will be in charge of deciding how trust assets are used. Make sure you designate a trustee who is up to the task of managing the trust funds and using them appropriately. It is also important to name a secondary trustee in case the primary trustee passes away or is otherwise unable to fulfill this responsibility.

Trust assets can be used for supplemental care and services required by the disabled person. This may include medical costs such as doctor’s visits or medical devices, educational expenses, and transportation costs.

Contact our Naperville Trust Lawyer

If you are interested in setting up a special needs trust or have other estate planning needs, turn to the skilled Naperville estate planning lawyers at the Gierach Law Firm. We can help you explore all of your estate planning options and determine the best way to meet your specific needs and financial goals.  Call our office today at 630-228-9413 to set up a confidential consultation.

Source:

https://www.investopedia.com/terms/s/special-needs-trust.asp