Parents often worry about their children and what the future holds for their offspring. Parents of children with special needs may be even more anxious than most parents, with an acute worry about who will care for their children after the special-needs child’s parents have passed away. Parents should be aware that there are estate planning options, such as a supplemental needs trust, that can ensure that their children will have assets to meet their needs long into the future.
What Is a Supplemental Needs Trust?
A supplemental needs trust, sometimes called a special needs trust, is a trust specifically designed to fund the care of a person with special needs while maintaining the person’s eligibility for government benefits such as Social Security and Medicaid. A trust has a trustee to manage the trust’s assets and the person with special needs is named as the beneficiary. The trustee determines how much of the trust’s assets the beneficiary receives.
What Are the Different Types of Special Needs Trusts?
Three different types of supplemental needs trusts exist:
• Third-party trust: Relatives of a person with special needs, such as parents or grandparents, establish the trust using their assets to fund it. Relatives usually establish such trusts rather than give a person with special needs a direct bequest in a will in order to ensure the person with special needs will maintain eligibility for government benefits.
• First-party trust: When a person with special needs has his or her own money through an inheritance or a court judgment, that money may go into a special needs trust to keep the person eligible for government benefits as long as the person’s relatives or the court establish the trust and the state receives any money left in the trust after the beneficiary’s death.
• Pooled trust: A pooled trust is set up by an organization to administer many people’s special needs trusts.
What Should Accompany a Special Needs Trust?
A special needs trust should be just one part of a plan for a child with special needs. Parents may also want to consider:
• Appointing a guardian
• Drafting a letter detailing information for the child’s caregiver, such as medical history, religious practices, favorite foods, hobbies, etc.
• Arranging housing for when the child becomes an adult
• Establishing health insurance for the child that will last into adulthood
Talk to an Attorney
Planning for a child with special needs may seem like an overwhelming task. A sensitive, experienced estate planning lawyer can make the process manageable, however. If you have a child with special needs, do not delay in seeking legal guidance to create a plan to provide for your child after you are gone.