As the parent of a disabled child, you might worry about what will happen if and when your child outlives you. If your child requires lifelong care or support, what will happen when you are no longer around to provide it?
One option is a special needs trust, also called a supplemental needs trust.
A trust can provide financial stability
Many intellectually disabled adults struggle financially. Besides being unable to work, they may have difficulty balancing a budget or remembering to pay bills. Disabled adults are also vulnerable to financial abuse and exploitation.
With a special needs trust, you can designate a trustee to handle your child’s funds. This can protect your child’s best interests by allowing a capable person to make responsible financial decisions on his or her behalf.
Your child can still receive public assistance
Government programs like Medicaid and SSI provide an essential safety net for disabled adults. However, relying on these benefits alone can be difficult. Eligibility depends on financial need, so an inheritance can affect your child’s ability to receive assistance.
When you leave money in a trust for your child, the trustee controls the funds and the beneficiary has no direct access to them. Because the funds technically belong to the trust and not the beneficiary, they do not count against the beneficiary’s means-tested government benefits. Your child can continue receiving benefits to cover his or her basic needs while also having access to the trust.
When planning for your disabled child’s future, you should consider establishing a special needs trust to meet your child’s needs while protecting his or her public benefits eligibility.
