Parents of children with special needs likely have many questions about who might care for their offspring if they pass away unexpectedly or become too ill to care for them. These individuals might obtain greater peace of mind by creating a special needs trust that safeguards a child who requires daily medical care and living assistance.
According to Special Needs Financial Planning, proper planning in regard to a special needs trust requires several steps that involve documentation, financial preparations and discussions with those parents plan to include in the trust.
1. Initial planning
The first step parents may want to take when setting up a special needs trust is to consider not only who they wish to name as a trustee but what kind of care their child might need in their absence. Parents might consider the nature of the child’s disability, where he or she will live in the event of the death of both parents and what type of trust will best benefit their child and anyone who wishes to contribute to the trust.
2. Making financial decisions
No matter the type of special needs trust parents create, each must have means of funding. Some types, such as third-party trusts, still allow a disabled child to receive government benefits, even though family members and others continue to fill the trust. Almost anyone can contribute, but parents may want to keep in mind that tax laws for such trusts may vary, depending on the type chosen.
Setting up a special needs trust requires current and complete documentation. A Letter of Intent for creating the trust is especially important, and parents who created the trust may want to update their documentation often.
Parents can avoid errors in making a special needs trust by working with financial planners and ensuring the trust is fully funded to protect their child’s future.