Many parents who have a child with special needs have to concern themselves with:
– Ensuring that they’ve earmarked someone to take care of their child if they are unable to do so
– Ensuring they remain eligible for government benefits such as Medicaid
– Ensuring there are finances set aside to care for them down the road
Funding a trust is a way that special needs parents can accomplish the latter.
If you’re looking into options for funding a trust, you might have come across a special needs and supplemental trust.
How do special and supplemental needs trusts differ?
Both of these trusts are similar in that they allow someone who has disabilities to qualify for public benefits.
A supplemental needs trust is different in that someone uses third-party assets to fund it. Grandparents, parents and other relatives often contribute money to fund supplemental needs trusts.
Special needs trusts have a primary purpose: to hold a person’s assets so that they can qualify for government benefits. Placing their assets in a trust allows them to gradually spend the funds they have without having to do so all at once to remain eligible for government benefits such as Medicaid or Social Security. Special needs trusts are court-supervised, and generally, a person must be seeking medical treatment to warrant setting one up.
Trustors generally have limited accessibility to the assets contained in either one of these trusts. They often restrict trustors from using trust funds to make any purchases covered by their government benefits.
How to determine which trust is right for your family
There are a variety of trusts to choose from if you have a child with special needs, you want to shield your assets from creditors or be more deliberate about how to leave behind funds to relatives.
Funding a trust for a special needs loved one isn’t the only step you should take in the estate planning process. You’ll want to appoint them a guardian as well.
The best way to approach things is with advanced planning. You’ll want to ensure that your special needs loved one’s interests are protected now and in the future for your peace of mind.