If you are a parent of a child with a developmental disability, you have likely spent countless hours advocating for your child’s rights and ensuring they receive the proper care and resources they need. However, you may have concerns about what will happen to your child once you are no longer able to provide that care.
It is natural to worry about how your child will fare after your passing, but there are ways to ensure they receive the support they need. One of these ways is through a special needs trust.
What is a special needs trust?
A special needs trust is a legal tool that makes arrangements for financial support to a person with a disability while maintaining their eligibility for government benefits such as Medicaid and Supplemental Security Income. These benefits will likely not be enough to care for your child on their own. For example, the maximum SSI benefit only reaches 74% of the federal poverty level for an individual.
When you set up a trust properly, benefit eligibility purposes will not count the trust as an asset or income. This is because the trust supplements government benefits, rather than replacing them. Then your child can access all possible resources without penalties.
What are the different types of special needs trusts?
There are different types of special needs trusts that you can choose from when setting up a trust for your child’s care. The three most common types are:
- Third-party trusts
- Self-settled trusts
- Pooled trusts
Someone other than the person with a disability creates and funds a third-party trust. The person creates a self-settled trust using their own assets, such as a personal injury settlement. A nonprofit organization manages a pooled trust by combining the assets of many people to create a larger trust.
People often put off estate planning because they do not want to consider the implications of death. However, proper preparation safeguards your loved ones and preserves your legacy. As a parent of a child with a developmental disability, establishing a special needs trust can be a practical step to ensuring that your child receives proper care after you are gone.