Caring for a disabled child is usually not an easy task and can keep you constantly busy doing what it is you need to do to ensure your child’s basic needs are met on a daily basis. However, the financial needs of your disabled child is also an important concern you should be planning to address. Part of this planning will include administering your estate in the case of you passing away unexpectedly. You will want to make sure your disabled child is taken care of. One of the options to do this is through the use of a special needs trust. 

Special needs trust objectives 

Many disabled children are dependent on social welfare programs provided by the government. This means your trust-based estate planning should take this into consideration to ensure your special needs child will continue to receive these benefits from programs such as Medicaid or Social Security Income (SSI). Your trust should be designed to make sure your child remains eligible for these public benefits in addition to providing long-term financial support. 

A special needs trust is advantageous because the money and capital kept in the trust will not be considered income which means it will not count against your disabled child in determination of eligibility for public benefit programs. The trustee will be appointed to manage the funds and will be instructed to make sure to manage the funds in a way that avoids losing eligibility for social welfare programs which are crucial for your disabled child to thrive. 

How would the funds in a special needs trust be used? 

There are many ways the funds could be utilized in the context of a special needs trust for your disabled child. Some of these uses related to caretaking may include clothing, educational costs, furniture, medical needs, transportation and more. You can leave instructions for the trustee who can help guide how funds will be utilized in maintaining a certain quality of life for your child. 

When is a good time to create a special needs trust? 

The proper timing of the creation of a special needs trust will be dependent on your specific situation, needs and preferences. One strategy you may consider is including the special needs trust in your own estate plan. This would make the trust active only upon your death which would financially support your child over the long term. 

Alternatively, you could activate the special needs trust while you are still living. This type of trust, referred to as a living trust, would enable other family members to contribute assets to the trust for the benefit of your disabled child. 

What is the best way to start a special needs trust? 

Choosing how exactly to create your special needs trust for your child can significantly impact the quality of life your disabled child will have after you have passed away. Therefore, be sure to carefully consider your own circumstances and what the specific needs of your child are. Seeking the advice of a competent and knowledgeable financial advisor may be an effective way to help you better understand your options before making this crucial decision. 

Opinions expressed are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice.