Raising a child with special needs requires patience, love and planning. More so than with other children, a child with special needs will require support, possibly through their entire adult life. From help managing their finances to assistance in maintaining their own health through self-care, there may be many areas in which your child will require help as they grow older.
Unfortunately, when you die, that will mean that your child will lose the primary source of emotional and financial support upon which they have depended their entire life. Careful estate planning can help ensure that your child will have the resources they need even after you die.
Creating and funding a special needs trust can be an ideal way to provide for a child with special needs, as these trusts protect children with special needs from two of the most common issues related to an inheritance.
A trust protects your child from squandering assets or manipulation
Even if your child with special needs is still an adult, if they require support and guidance, they may not be able to handle a large inheritance properly. They could potentially spend it in a short time, leaving them with no resources later in life. With a trust, the trustee can control all withdrawals from the trust.
Additionally, if a person with special needs has direct control over a sizable amount of money, the risk exists for other people to manipulate that person for their own financial benefit. By putting your child’s inheritance in a special needs trust, you prevent them from using it unwisely and from others ever gaining access to it.
Putting funds in a trust can ensure your child still receives benefits
Some people with special needs are able to achieve varying degrees of independence through government support programs. For example, housing benefits may help a person with special needs who works a part-time job afford rent in a home, possibly with some support from staff members. Additionally, your child may depend on Medicaid for their health care costs.
A large inheritance could prevent your child from receiving government benefits for many years, possibly placing them in a disastrous financial situation. Provided that you carefully structure the trust to avoid someone withdrawing too much at one time, your child could have an inheritance that enhances their life without disqualifying them from benefits upon which they rely.