Planning for the future of a child with disabilities is crucial to ensure their well-being and financial security.
A special needs trust can fill a critical role. It allows parents and guardians to provide for their child’s needs without jeopardizing their eligibility for government benefits.
Understanding special needs trusts
Essentially, this type of trust manages assets for a person with disabilities. Because these assets are held in a trust, they do not compromise a disabled individual’s eligibility for public assistance programs (Medicaid, etc.).
There are two main types: first-party trusts, funded with the disabled individual’s own assets (like an inheritance), and third-party trusts, funded by family members or other third parties.
Creating a special needs trust
To create a special needs trust, you must determine the funding source (first-party or third-party), and choose a dependable trustee. Once the document is created, you must fund the trust by transferring assets to its control.
As mentioned, a special needs trust helps to ensure government assistance eligibility. Here are some additional benefits:
- Financial security: Provides a reliable source of funds for the beneficiary’s needs.
- Asset management: Professional management of assets to meet the beneficiary’s long-term needs.
- Creditor protection: Shields trust assets from creditors and legal judgments.
- Customized support: Asset distributions addressing the specific needs and circumstances of the beneficiary.
As you can see, a special needs trust can make a meaningful difference in the lives of your most vulnerable family members. By carefully planning and working with an experienced representative, you can feel easier knowing your child will have the financial resources they need without losing access to essential government benefits.