For many parents, the main concern when outlining wishes for an estate plan involve minimizing fighting among heirs and ensuring a positive legacy. Some people, however, have to take more careful steps when planning an estate. Parents of children with special needs, ranging from severe medical conditions to developmental conditions, often need to invest more time and effort in the creation of a fair and legally sound estate plan.
If you have a child who likely won’t ever be able to manage his or her own finances, living situation and daily care needs, you’ll need to take extra care in the estate planning process. Adults and minor children who have special needs may benefit from the creation of a special needs trust to protect them when their parents no longer can.
Understanding the function of a special needs trust
A trust, at its most basic, is a legal manner of controlling how your assets will be managed. Trusts allow you to place restrictions on the disbursement of your assets. Whether it’s waiting until a beneficiary reaches a certain age or creating a limit for annual withdrawals to ensure an ongoing source of income, these restrictions can provide you with more control over the assets you leave behind.
A special needs trust can be put in place to protect a vulnerable family member or another heir. A carefully planned and fully funded trust can provide financial resources and support for your loved one for years or even decades after you pass on. It may even be possible for a special needs heir to qualify for Medicare, Medicaid or other types of governmental aid with a trust. A cash inheritance, however, could preclude access to those benefits.
Make sure you name the right person as your trustee
Whether you name one person for this role or split the authority and responsibilities among several people, make sure that the people you name as your successor trustees are trustworthy. They should be willing to place the needs of your trust beneficiary above their own when it comes to making decisions about trust assets. In some cases, their role may be similar to that of a guardian who cares for your child. Make certain that the person or people you name can handle the responsibilities.
Don’t wait until later to establish a trust
You may think you have all the time in the world. However, your life can change in the blink of an eye. Don’t gamble with your loved one’s future. There is no better time than the present to put your plan together.