For parents, ensuring the safety and comfort of their children is usually a top lifetime priority. Parents often have a keen desire to ensure the stability of a child’s day-to-day life. The obligation to provide for children may inspire a parent to establish an estate plan. That way, if anything happens to the parents while the child is still young, they have resources to help them cover their basic cost of living expenses and a carefully selected guardian to provide practical support.
Some children may require more assistance than others. For example, a child with special needs is less likely than their peers or siblings to live independently. They may rely on the practical and financial support of their parents for the rest of their life. Parents want to ensure that vulnerable children with special needs receive assistance without immediately becoming ineligible for key benefits.
For many parents, funding a special needs trust can be a reliable solution that allows them to meet their child’s needs without cutting them off from other forms of support.
An inheritance can affect benefit eligibility
Parents frequently name their children as their primary beneficiaries in their estate plans. While that may seem like a reasonable means of providing support after a tragedy, a direct inheritance has numerous practical drawbacks.
For starters, a child with special needs may not be able to properly manage inherited resources. They could be at risk of financial abuse and fraud. Additionally, their caregivers could theoretically assume control over their inheritance.
As if that weren’t worrisome enough, parents also have to consider the possibility of a lump-sum inheritance eliminating a child’s eligibility for key benefits. There are medical, housing and financial benefits that can facilitate enhanced independence for adults with special needs. A child may become ineligible for those benefits because of the value of their inheritance.
A special needs trust can preserve benefits eligibility and limit the risk of financial abuse while providing structured support for a loved one with special needs. The terms included in a trust may allow beneficiaries to use trust resources for certain expenses, including housing, enrichment activities and educational expenses.
The trustee has a fiduciary duty to act in the best interests of the beneficiary with special needs. Choosing a trustee who is different from the person nominated to act as the caregiver for the child if they lose their parents can be particularly helpful, as it limits the risk of financial misconduct. The child with special needs can enjoy a more comfortable standard of living without giving up the resources that allow them to live independently.
Discussing the support requirements of a child with special needs and the resources available to fund a trust with a skilled legal team can help parents choose the best way to support a vulnerable child. Well-funded special needs trust can make multiple forms of support accessible to vulnerable individuals while providing their parents or caregivers with peace of mind.
