Parents of children with special needs usually don’t consider creating a special needs trust until their child turns 18. But special needs trusts are versatile instruments that can do a lot more than simply protect a person’s access to government benefits. Here are some reasons not to wait:
- Estate Planning. The primary reason in creating a special needs trust before a child’s 18th birthday is the same reason parents of children without special needs should have an estate plan – to provide security and stability for family members should something happen to them. If parents of a child with special needs pass away unexpectedly, an active special needs trust will allow the estate to be held for the benefit of the child with special needs in a way that offers maximum flexibility for the child.
- Gifts. Parents may want to consider establishing a special needs trust for their minor child so that relatives can fund the trust with gifts. Older relatives planning to leave an inheritance for a child with special needs may give the bequest directly to the trust.
- Life Insurance. Parents of a child with special needs may want to buy a life insurance policy that will help pay for their child’s care after they are deceased. Special needs trusts can hold life insurance policies and manage the proceeds from those once the parents have died.
- Home Ownership. Special needs trusts can also own homes, decreasing the risks of placing property responsibility in the hands of someone who may not be able to properly maintain a home.
- Care Management. Special needs trusts can provide specific care instructions as well as the arrangement of family involvement in the daily activities of a person with special needs. In addition, experienced special needs trustees can assist families looking for additional care options for their children.
Planning early and frequently updating and improving a special needs trust can be the difference between a fairly useful trust and a highly effective one. In most cases, the trust will be unfunded during the lifetime of the parents, regardless of the child’s age. But having the trust available is a valuable planning technique.
Source for Post. Academy of Special Needs Planners, Special Needs Answers.
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