Taking care of a child with a disability is a constant but rewarding challenge for many parents. However, parents need to recognize that they may not always be around to give the care they need to their children. They need to provide for the future of their child. One way to do this is through a special needs trust.
Why Establish a Trust?
People with disabilities have no guarantee of SSI and other government benefits. These things can make all the difference when it comes to their care, but they can become ineligible for those benefits very easily.
For SSI, assets over $2,000 ($3,000 for couples) renders someone ineligible. Even if those assets above the limit are sold or given away, it will still factor into the SSI eligibility decision.
For Medicaid, the asset requirements are tighter. These assets can also have variations by state.
A person with a disability will have needs that will extend the course of his or her lifetime. There's only so much a parent can do to see to it that their child is eligible to have those needs taken care of. One of the main ways of staying eligible for these benefits is through a special needs trust.
How a Special Needs Trust Works
A special needs trust is a fund administered by a trustee. The trust fund will contain assets owned by the trust, not the loved one the trust supports. This helps to bypass the asset requirements for benefits. The trustee can use the money on behalf of the person with the disability in an infinite number of ways, with the caveat that the trustee cannot give the person cash directly.
The reason this works is because the person applying for benefits has no control or even say over the trust, so it's not counted as an asset. Because this type of trust is specifically a "special needs" or "supplemental needs" trust, it means that the assets will go towards dealing with the needs that occur because of the disability.
The Matter of the Trustee
One of the main issues that can come up with a special needs trust is choosing who will hold the title of trustee. Not everyone is a good candidate. It's important to understand the disabled person's condition, their needs, and how best to use the assets for them.
This isn't always easy, and many people, such as family members and friends, may not understand what's required of them. One way around this is to use a third party or look into a pooled trust.
Consider the Future for Someone with Special Needs
Life goes on for those with special needs. Their current needs will become their future needs. They will need care and their families will need to create a life plan for them that takes those future needs into account.
Starting a special needs trust is only one option. Those with children or loved ones with special needs should speak to a dedicated life planning service such as Life's Plan Inc about what other options and considerations are available.