Funding a trust can give you peace of mind after your child’s diagnosis with a permanent condition like Down syndrome or a brain injury from a car crash. A special needs trust helps ensure that your child will have the necessary supports to live a safe and comfortable life even after you die.
Funding a special needs trust may require as much planning as preparing for your own retirement. The resources that you set aside for your child will help provide for their basic needs for years after you die.
A special needs trust can also be a powerful form of support for your child while you are still alive, not just after your death.
Special needs trusts facilitate independence
Your child may want to live on their own or in a specialized facility with other people who have the same medical conditions as they do. Such arrangements can give them a more active social life and a feeling of controlling their own daily life.
However, it is often difficult for adult children with special needs to make enough money to support themselves or to handle all of the responsibilities of an independent living space. When you create a special needs trust, you can provide supplemental financial support for a child who wants to live on their own.
You can set aside a certain amount of money to add to their budget every month while limiting what they use those funds for, like only allowing them to go toward education, housing or food. Additionally, by carefully limiting how much your child accesses at once, you can still give them an opportunity to qualify for certain forms of state aid, like Medicaid.
Finally, a trustee is an important secondary form of protection, as they will play an active role in managing your child’s daily life and finances.
How do you fund a trust?
The funds many people need to establish a trust will come from their estates. They may transfer their home to the trust so their child can live there indefinitely or use life insurance proceeds to fund the trust. You may need to be more creative in your funding efforts if you want your child to have access to the trust while you are still alive.
Reviewing your household financial circumstance and your child’s needs can help you start the process of creating a special needs trust for their protection as they grow up and after you die.