Raising a child with special needs involves worrying about all of the “what if”s and “what then”s that may await them as their needs change. It means working to maximize their options and secure resources for them as you both age.
One tool that can help is a special needs trust. This is a type of trust that is specially designed to help manage the financial needs of your special needs child, whether they live independently, require ongoing care, and/or would benefit from assistance with financial decisions, asset management, and other needs that support a full life.
Special needs trusts are the most stable and secure way to ensure that your child receives the care and asset protection they need to thrive. In this post, we focus on testamentary special needs trusts, which are trusts your children “inherit” when you pass. For information on stand alone special needs trusts, please contact our office.
Why Would You Need a Special Needs Trust?
Special needs trusts are also commonly called supplement needs trusts because they do just that–they supplement and support your child throughout their life without burdening them with this responsibility.
Most individuals with special needs will require the help of additional services. Medicaid and SSI are the most common forms of additional services available for those with special needs. Unfortunately, nearly every single service of this nature has a cap on how many assets an individual can have before they suffer service penalties, restrictions, or total loss of benefits.
If, for example, you bequest (leave an inheritance for) assets for your special needs child outright or in Trust for them, these assets increase their estate and may result in the loss of support services. Ideally, you want to leave assets for them in a protected form that will not trigger a loss of crucial support services. This is where a special needs trust comes in.
A special needs trust places your assets into the trust that is managed by a third party so as not to affect or interfere with government benefits. When your child is the beneficiary of a special needs trust, there is no risk of losing benefits because special needs trusts do not change their financial standing. Instead, funds allocated from a special needs trust serve to supplement, rather than replace, government benefits.
What Can a Special Needs Trust Help With?
Special needs trusts are context specific in how they work. They accommodate the specific and unique needs of your child.
Special needs trusts can help to support with:
- Home care
- Buying medical equipment
- Affording medical treatment, including physical, dental, and psychological
- Private rehabilitation
- Educational training
- Enrichment items
- Enrichment activities
- Personal care
- Living expenses
- Food expenses
- Travel expenses
- Adaptive modification expenses for automotives
- Electronic devices
- Trips to see family and friends
- Health insurance premiums
- Purchasing a primary residence
- Paying for space in a group home
As this list indicates, a special needs trust helps with so much more than medical expenses. Their purpose is to support your child so that they can live a full and rich life, whether this means supporting their interests, creating opportunities for them to see the people that matter to them, or paying for essential care.
Can I Leave an Inheritance to a Special Needs Child?
Yes, but we don’t recommend it. As we mentioned earlier, increasing your child’s assets could result in their loss of benefits. Testamentary special needs trusts serve as your best alternative here.
What’s the Best Way to Set Up a Special Needs Trust?
The best way to set up a special needs trust is to work with an experienced trust attorney. They can set up a special needs trust for your child as part of your own estate plan.
Craig Associates, P.C. are experts in creating special needs trusts. This is an important aspect of our estate planning practice. Please reach out to us today to learn more about how we can help you plan for your child’s future.