For most parents, the biggest concern about their death is naming a guardian if their children are minors or ensuring that their estate plan has accurate information about how to handle their assets after they pass. For parents of a child with special needs, however, there are other critical considerations.
Without the protection of a parent, your special needs child could end up named a ward of the state, placed in a poorly run institution or even abused by someone who should be providing care. Depending on the degree of the condition(s) impacting your child, he or she may not ever be able to live independently at any age. You should take steps now to ensure your child has the support and protection needed to thrive without you.
A special needs trust can ensure ongoing financial support
Creating and properly funding a special needs trust can do a lot to limit the potential financial hardships your special needs child will face after your death. Unlike a standard inheritance, funds withdrawn from a trust over time place less of a tax burden on your child.
If you simply leave your assets to your child in your will, that could preclude your special needs child from receiving any kind of state support. Additionally, he or she could end up the victim of financially abusive people who could manipulate the situation for personal gain.
More importantly, there can be quite a few limits and restrictions in place to prevent waste or dissipation of the assets your child will rely on for the remainder of his or her life. You can limit the use of the funds to cover housing, medical needs beyond what insurance handles and other basic necessities.
Alternatively, you can cap how much someone can pull out of the trust at any given time. Doing so helps ensure that the fund will last as long as it is needed, instead of getting used up in a few months by careless spending.
You can place items, not just money, in a special needs trust
If you would like your special needs child to remain in the family home and have named a guardian who will live with your child and provide care, arranging to have your home placed in the trust is a sound legal and financial decision.
This can help ensure that your child remains in a familiar and safe environment. You can even take steps to arrange for compensation for the guardian caring for your child, to help incentivize him or her to do the best job possible.
However you choose to structure and fund your special needs trust, the important thing is to take steps now to protect your child, instead of waiting for some time down the road to address the issue.