Many families of children with special needs make the common mistake of not setting up a trust fund. The families think that there is no need to since they are still healthy and young, or they think it may be a waste since they do not have a lot of money saved up. Both of these reasons are harmful excuses for not setting up a special needs trust fund.
While it is not pleasant to think about, something could happen to you and your spouse at any time. This would truly be a heartbreaking situation, and if you do not have arrangements made for your special needs child and your assets, then it could become a huge problem.
Even if you are not wealthy, it is still essential to set up a living trust for your child. Your child is most likely receiving assistance from SSI or Medicaid. These two government programs have strict rules saying that people on disability can only make a certain amount per year — usually $2,000.
Therefore, if you and your spouse were to pass away, any liquid assets over $2,000 left for your child would disqualify them from SSI and Medicaid. Your child would have to spend all but $2,000 of his inheritance before they can qualify for SSI or Medicaid again.
The Purpose of a Trust Fund
The purpose of a trust fund, also referred to as a Special Needs Trusts or Supplemental Needs Trusts is to benefit your child with special needs alongside with their SSI and Medicaid. The trust can cover the extras that are not covered by SSI and Medicaid. If the trust is done properly, then the assets your child receives will not be considered as income.
A trust fund for your child can be set up by anyone. The parents of the child usually set up the trust fund, but there are some instances where a close friend or grandparent wants their inheritance to benefit your child.
Appointing a Trustee
When you set up a trust fund, you will need to appoint a trustee. A trustee is a person or entity that is appointed by you to distribute and manage your trust in accordance to the trust’s documents. The right trustee can put your mind at ease that your child with special needs will be taken care of financially if anything were to happen to you.
Whether you consider yourself healthy or feel as if you do not have a dime to your name, it is still essential and highly recommended to set up a trust fund for your child with special needs. No one will be able to take care of your child like you can, but by properly setting up a trust fund for your child puts them in a better situation if certain circumstances arose.
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