It isn’t easy being a parent. Even if all goes well, taking care of a child requires a major commitment of time, energy and money.
But what happens when a child has special needs? When that is the case, parents need creative strategies to make sure that a child receives appropriate financial protections for handling available resources.
One of those strategies is to create a special needs trust. For families in Massachusetts and across the country, establishing such a trust can be a good way to help a child whose special needs require an additional level of estate planning.
Families who are considering the creation of a special needs trust should be aware that these trusts are not one-size-fits-all. In particular, a basic distinction is between trusts established by third parties and those established using the beneficiary’s own resources.
Third-party trusts are often created by wills. There is therefore no immediate funding to put them into effect.
But a special needs trust can also funded by the beneficiary’s own resources. A first-party trust can use assets such as money from the settlement of a lawsuit or money that was given to the beneficiary by a family member.
There is also a third type of special needs trust. A pooled trust is a way for grantors with relatively few assets to combine those assets with those of others.
Of course, the type of special needs trust that is most effective in a given case depends on the specific facts of that case. If there are disability issues present, then Social Security disability considerations should also be considered in the planning process.
Source: The Fiscal Times, “Estate Planning Guide for a Special Needs Child,” Sonya Stinson, July 10, 2013