If you are the parent or guardian of a special needs child, you want to ensure that your child will remain financially secure when you are no longer there to provide support. Your child likely has significant, ongoing expenses, and uncertain future expenses and public benefits. Determining how much a special needs trust should hold is a big challenge.
Fortunately, help is available from attorneys and financial planners with expertise in disability issues, as well as from special needs calculators, such as this online version provided by Merrill Lynch. The calculator asks a series of questions to help you plan, such as:
- The beneficiary's sources of income - salary, public benefits, investment income and legal settlements
- The beneficiary's expenses - housing, transportation, medical and personal expenses
- The beneficiary's life expectancy
- The parent or guardian's time until retirement
- Expected rate of return and inflation
The calculator then comes up with an estimated lump sum needed to fund the trust.
Once you have this estimate, you'll need to decide how to generate the funds. You may need to balance the interests of your special needs child with your other children and your own. Don't forget to create or update an estate plan and determine which of your assets you’ll leave to the trust. Also, advise relatives to direct gifts and bequests to the trust, rather than the child, to avoid the risk of disqualifying the child from eligibility for public benefits.
Source for post: Special Needs Answers from the Academy of Special Needs Planners, August 2007
Technorati Tags: Estate Planning, Trusts
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