A special needs trust is one that gives parents the ability to provide for disabled children in the event of the parent's death. This type of trust, which is also known as a supplemental needs trust, ensures that a disabled person, who you care for, continues to receive the necessary care he or she needs even if you cannot provide it because of your death.
Benefits One of the main benefits of this type of plan is that it ensures that the disabled person's needs continue to be met. It also protects that person's ability to qualify for programs such as Social Security, Medi-Cal and government entitlements. Due to the limitations of these programs, those who qualify must not own numerous assets. According to the Social Security Administration, a person receiving these benefits may not have more than $2000 in any assets, which includes a vehicle or a house. Therefore, should you die, you cannot leave your home or your car to your child with a disability if he or she receives these types of government programs without some sort of trust to protect those assets.
Note that by placing these types of assets into a trust for the child, he or she can continue using them without loss. For example, a man sets up a trust to care for his son who is receiving Social Security income. To ensure the child continues to receive these funds in the event of the father's death, the father creates a trust that holds assets, including the home, car and money in savings. If the father dies, the child continues to live in his home, and continues to receive government assistance.
Why Not Just Give to Family? Sometimes, families will avoid trusts like this because they believe other family members will take in the child with disabilities and care for his or her needs. Any money you leave behind, though, may become a factor in divorces, debt settlements and even be lost through bankruptcy. The person you list may not spend the money on the needs of the person. In some cases, the added assets can force the person into a higher tax bracket, causing heavier taxation. Or the family member could die, thus putting the disabled child at risk.
How to Get It Contact your estate planning attorney to determine the specific requirements and qualifications for obtaining a special needs trust for your child. You will also need to plan who will be the person in charge of maintaining the trust on behalf of the child. Consider the value of using this particular type of protection tool to care for your adult or minor child.
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