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How to Establish a Special Needs Trust for Your Child

by Stanley Clark

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Raising a child may be expensive, but raising children with special needs is even more costly.

Children with special needs often have medical, pharmaceutical, and therapeutic expenses. Fees for caregiver services and the equipment necessary for these children to live comfortably may overwhelm the family.

Properly planning to meet your child's financial needs is a critical part of parenting. These plans often continue well past the typical age of adulthood.

For this reason, it's necessary to prepare a special needs trust in the event of your death. Just make sure that when doing so, your devices are secure and private.

What Is a Special Needs Trust?

A special needs trust (SNT) is established specifically for individuals with mental or physical disabilities. The trust is usually established by a parent, with a child with special needs as the beneficiary.

You may appoint a third-party trustee to make disbursements from the assets in the trust on behalf of your beneficiary.

Now that you know what a special needs trust is, here are some tips on how to set up one for your child:

Determine How Much Money to Put in the Fund Based on the Type of Care Required

The extent of care that your child needs determines the amount of money you'll need to put in the fund. Consider your child's age and how long you would like this fund to last.

Think about your child's current state and possible future conditions, then have a conversation with family members, your child's doctor, and financial planners.

Advice from experts and loved ones can help you decide the right amount of money to put in your child's fund.

Choose the Type of Trust That Will Greatly Benefit Your Child

Funded and created by an independent body, a third-party special needs trust can be established in two ways that can both benefit your child:

  • Sub-trust of a parent's revocable living trust, which won't be funded until your death. This trust type should be established when you want to leave the money to your child and no other relatives.
  • Single stand-alone trust, which is used when family members want to give cash gifts throughout the child's lifetime.
Keep in mind that the funds in this type of trust can't be used for food or housing. Upon the death of the original beneficiary, the remaining assets can be left to the beneficiary of your choice.

A first-party special needs trust is set up with assets that originally belong to the beneficiary. It can be used for personal injury settlements, individuals with substance abuse problems, or outright inheritances.

Before, only the beneficiary's parents, grandparents, or the court could establish the trust document. But now, individuals with the capacity to do so can accomplish their own first-party SNT.

Pooled special needs trust collects assets from different family members and friends. The assets are then placed into a large investment fund.

Pooled trusts are established through a non-profit organization that manages the trust, investment decisions, and taxes. If you're concerned about asset protection, then the first- and third-party special needs funds could be a more viable option.

Seek Professional Legal Help

The laws surrounding special needs trust are very complex. Thus, having an attorney with sufficient experience in the area is essential to ensure that the trust is set up properly and all your bases are covered.

Additionally, legal professionals may provide added resources, such as contact information for financial planners and personal referrals, to others in the same situation.

Raising a child with special needs requires unique planning. Start thinking ahead for your child's future, so he'll maintain normalcy as he adjusts to life without you in it.

Stanley Clark is a community development volunteer and writer. He had worked on several commercials, events, and campaigns before writing full-time in the area of natural health and wellness. He has a particular interest in reviewing CBD brands for their safety and legitimacy with CBDClinicals.com. Interested in breaking the taboo about cannabis, Stanley believes in CBD's potential for helping people and communities with their health and wellness concerns.



Disclaimer: Internet Special Education Resources (ISER) provides this information in an effort to help parents find local special education professionals and resources. ISER does not recommend or endorse any particular special education referral source, special educational methodological bias, type of special education professional, or specific special education professional.