As the parent of a child with a developmental disability, you understand the needs of your son or daughter better than anyone. Still, you probably have some uncertainty about your child’s future. If you are looking to improve your child’s adult life, you may want to establish a special needs trust.
Sometimes called a supplemental needs trust, a special needs trust gives your child access to financial support without jeopardizing his or her eligibility for government benefits. Because Medicaid, Supplemental Security Income and other needs-based programs place restrictions on benefit use, the funds from the trust may enhance your child’s quality of life.
Preserve benefit eligibility
Many government programs have strict income requirements beneficiaries must meet. Funds in the special needs trust do not belong to your son or daughter, though. Therefore, trust disbursements are not likely to interfere with your child’s eligibility for government benefits.
Safeguard your financial resources
Because you have worked hard for your financial security, you do not want anyone to squander your wealth. When you form a special needs trust, you name a trustee to oversee the trust. Not only does this person help preserve your child’s eligibility for government benefits, but he or she also safeguards your financial resources. Specifically, the special needs trustee oversees investments and disbursements, while providing you with regular updates about the trust.
Boost your child’s quality of life
If your child receives government benefits, he or she may use them for everyday expenses, such as housing, food or utilities. Disbursement from the special needs trust, though, must not pay for these expenses. Rather, proceeds from the trust should pay for things that improve quality of life. Out-of-pocket medical expenses, health care aids and even vacations are usually acceptable. The trust cannot give money directly to your child, however, as this would likely jeopardize the government benefits he or she receives.
Comprehensive estate planning requires thinking carefully about your goals. If one of your concerns is taking care of your developmentally disabled child throughout his or her adulthood, setting up a special needs trust may be the way to go.