For any parent, providing for the basic and higher needs of a child is a top priority. As a child grows, a parent's list of concerns typically evolves from worrying about and providing for a child's basic needs and physical safety to ensuring that a son or daughter obtains an education and the skills needed to find a job and live on his or her own. However, parents who have a child with a physical, mental, or developmental disability may need to protect and provide for a child well past his or her eighteenth birthday.
Disabled adults who meet eligibility requirements can obtain government assistance through programs like Medicaid and Social Security disability. Additionally, they may qualify to receive housing subsidies and vocational training. However, these types of programs have strict income caps and disabled individuals who have assets in their name that exceed these amounts are automatically disqualified.
One effective way to provide for a child who has a disability, and also maintain his or her eligibility for government assistance, is to establish a special needs trust.
What Is A Special Needs Trust?
A parent, relative or legal guardian can establish a special needs trust of which a child is named the beneficiary and, because the assets legally belong to the trust, a disabled child maintains his or her eligibility for often much-needed government programs. A trust can be funded directly by family members, with the beneficiary's own assets or with assets from an inheritance or lawsuit. A trustee is named to manage, invest and distribute the trust's assets for the benefit of the beneficiary.
Assets held in a special needs trust may be used for the benefit of the beneficiary for various needs including the following:
- Daily living expenses
- Basic care needs
- Educational and training needs
- Vacations and recreational activities
How An Attorney Can Help
Like any trust, there are very specific requirements associated with how a special needs trust must be established, funded and managed to ensure for its validity and to preserve a beneficiary's eligibility for government assistance programs. It's important, therefore, to turn to an estate planning attorney for assistance.
Additionally, an attorney will also work to ensure that a special needs trust is tailored to meet the specific needs of a beneficiary and that all related reporting requirements and rules are met and followed.
Learn more about special needs trusts.