- What if the child with the money divorces? The spouse may be entitled to half of it and will likely not care for your other child.
- What if the child with the money dies or becomes incapacitated while your special needs child is still living? Will his or her heirs care for your special needs child as thoughtfully and completely?
- What if your child loses a lawsuit and has to pay a large judgment or has other significant creditor problems? The court will certainly require your child to turn that money over to the creditor.
KEY QUESTION #1: Should I consider a Special Needs Trust for my child? Parents whose children require or are likely to require governmental assistance to meet their basic needs should consider establishing a Special Needs Trust. Many disabled people rely on SSI or other government benefits to provide food and shelter. But these benefits rarely provide more. Parents have been advised to disinherit their disabled children – the children who need their parents help most! – to protect those benefits. The special needs trust allows parents to provide for more than subsistence even after they are incapacitated or gone. KEY QUESTION #2: What “Special Needs” will this trust meet? The special needs trust is designed to promote the disabled person’s comfort and happiness without sacrificing eligibility for essential government benefits. Special needs can include medical and dental expenses, annual independent check-ups, necessary or desirable equipment (such a specially equipped vans), training & education, insurance, transportation, and essential dietary needs. If the trust is sufficiently funded, the disabled person can also receive spending money, electronic equipment & appliances, computers, vacations, movies, payments for a companion, and other self-esteem and quality-of-life enhancing expenses. KEY QUESTION #3: When should I create this trust? Because none of us knows when we may die or become incapacitated, it is important to plan for your special needs child early, just as you would for other dependents such as minor children. KEY QUESTION #4: Where do we find the money for this trust? A key benefit of creating the trust now is that extended family and friends can then make gifts to the trust or remember the trust as they plan their own estates. You can also consider whether making the trust the beneficiary of a life insurance policy makes sense now, while you are healthy and insurance rates are low. In addition to the gifts and inheritances from other people who love your child, you can leave your own assets to the trust in your will. You can also name the trust as a beneficiary of life insurance or retirement benefits. KEY QUESTION #5: Who will manage our child’s Trust? During your life, you can manage the trust. When the parents are no longer able to serve as trustee, whoever they have chosen can serve according to the instructions that they parents have provided. Some parents choose a team of advisors. Others choose a professional trustee. KEY QUESTION #6: Can’t we just ask our other children to use our money for our special needs child’s benefit? Yes, you can and that can be a good solution for a brief time. It is not a lasting solution because of the many potential problems.