Estate planning often involves a careful analysis of your family circumstances. What you leave for each of your children will reflect not only your overall assets but your child’s character and your relationship with them. Certain situations require more careful planning than others.
If you have a child with special needs, you might assume that they cannot handle an inheritance. You might also worry that the legacy you leave for them would cut them off from crucial state benefits, like Medicaid, that they depend on to meet their basic needs.
Creating a special needs trust can help you leave something meaningful for a loved one with special needs while protecting their ability to qualify for certain benefits.
How a special needs trust works
Like any trust, a special needs trust depends on the instructions and funding provided by a testator. When you draft and fund a special needs trust, you set aside resources for your loved one with special needs.
The terms you set when drafting the trust will control when the trustee may distribute assets to or on behalf of your child. You might limit the dispersal of trust assets to basic cost of living expenses, medical bills or educational costs. You might also provide instructions that the trustee should pay parties directly so your child won’t have access to funds.
Including specific limits both for monthly distributions and annual distributions is also important. With proper planning, you can maximize how much the inheritance will augment your loved one’s lived experience without preventing them from receiving government benefits in the future.
Special needs trusts can help while you are still alive
You may appreciate the peace of mind that comes from knowing there are resources set aside for your child with special needs and a trustee to help them after you die. You may also find that a special needs trust encourages your child to pursue independent living when they are older.
Exploring the assets you have to pass on to the next generation and the unique needs of your family member with special needs can help you create a special needs trust that will protect them and help them continue to receive crucial benefits throughout their life.