Taking care of a child with special needs can come with challenges, including financial ones. However, you want to set your child up for success in every way, which means allowing them to take care of their medical situation with the best financial means possible.
The question is, how can you save large amounts of money for your child without disqualifying them from receiving financial assistance? Having the proper estate planning in place becomes critical and a Special Needs Trust can help.
1. Why Use a Trust Instead of a Bank Account?
A trust is where you can store money and assets so that if you were to pass away, the money does not go into limbo, pass to minor children, or enter probate as multiple parties fight over who gets what. You are able to include specific instructions in the trust that will be honored even if you were to become incapacitated.
Also, when your child has special needs, they can still qualify for SSI or Medicaid when monetary gifts or settlements are kept in the trust. When you save significant amounts of money for the future kept in the trust, you can still qualify for government benefits for your child.
2. Name a Trustee
You can appoint someone to be in charge of the trust and who will follow the instructions you set forth. Also, you should name the trust as the beneficiary for your assets in your will. That way, the money will be protected and continue with the trust instructions.
It is also important to outline the amount of money you would like to be released to your special needs child at certain ages. The trustee will ensure to follow the timeline according to your wishes.
3. Decide on the Type of Trust
Several kinds of trusts can benefit your special needs child. Look into first-party trusts that would be set up in your name. You can also set up a pooled trust, where multiple parties contribute to the trust without going through your name. Grandparents, schools, and charities can donate to this trust. It is always best to meet with an experienced attorney to create the trust that is best for your child.
By setting up a special needs trust for your child, you will ensure they will always have the financial means to take care of their specific circumstances. If you’d like to learn more about estate planning in Temecula and specifically, special needs trusts, Shoup Legal is here to help. Contact us at (951) 445-4114 or email us at [email protected] so you can have peace of mind knowing your child will be provided for.