All parents worry about their children. As children grow and become adults, most parents are able to let go and trust that a grown child is able to care and provide for him or her self. However, when a child has a physical or mental disability, those worries and responsibilities often carryover into adulthood.
Parents with a special needs child are often concerned about what will happen to a child after both parents die. While many adults with disabilities or special needs are eligible to receive social security disability benefits, monies awarded via SSD benefits are typically not sufficient to provide for an individual's monthly living and medical costs.
For parents facing the dilemma of how to provide for a disabled child, a special needs trust may be a good option. When setting up a special needs trust, a parent must name a trustee to help manage and distribute the trust's funds. Most financial experts and attorneys recommend that the trustee be a family member or someone else that knows the named beneficiary well. When this is not possible, a third-party institution may be an option.
When setting up a trust, it's important to consider how the trust will be funded. Several options exist to help fund a special needs trust including leaving a home to a trust or funding a trust via a life insurance policy premiums. Once the matter of funding a trust has been solidified, a parent can establish those expenditures for which the trust's funds should be used.
As with many estate planning matters, individuals who want to set up a special needs trust would be wise to contact a legal professional. An estate planning attorney who has experience establishing trusts can provide parents with advice and assistance to ensure a child will be provided for and his or her best interests protected.
Source: The Fiscal Times, "Estate Planning Guide for a Special Needs Child," Sonya Stinson, July 10, 2013