Newport Beach parents who are raising a special needs child will need to consider the future of their child — and how their child will be cared for — if they become incapacitated or die before their child. A lot of parents choose to create a special needs trust that will ensure the needs of their child will be met in the event of their untimely deaths.
Here are some of the benefits of a special needs trust:
- A special needs trust is created to house your child’s inheritance assets so that your child does not own them directly. Rather, the trust will own the assets and your child will be the sole beneficiary of income and distributions of those assets. This allows your child to essentially be asset-less in the eyes of the government, preserving his or her eligibility to benefit from Social Security Income (SSI) and Medicaid. The trust is then available to pay for expenses that government benefits don’t cover.
- There are tax benefits that families benefit from when creating a special needs trust.
- The creation of a trust establishes a legal and fiduciary obligation on the part of the trustee to administer the trust in a way that benefits your child, the beneficiary. The trustee is legally bound to use the assets to care only for your child. This is important because a child with special needs could potentially be manipulated or taken advantage of.
- If your child falls into debt, creditors cannot have access to the trust assets. The money can only be spent on the care and needs of your child and it is protected from creditors.
Newport Beach parents who want to create a special needs trust for their special needs child may want to discuss their options with an experienced estate planning lawyer. Your lawyer can assist you in determining what kind of special needs trust is right for you and your family.
Source: friendshipcircle.org, “The Pros and Cons of a Special Needs Trust: Ensuring Your Child’s Future,” accessed Sep. 01, 2017
