The U.S. Census Department estimates that approximately 20 percent of the U.S. population is living with a physical or mental disability. For a parent of a child who is born with a serious medical condition or who is diagnosed with major depressive disorder, there are often many questions, worries and concerns about a child’s future and how he or she will fair once a parent passes.

Parents who wish to provide for a child with a disabling physical or mental injury or condition may choose to establish a special needs trust. While a special needs trust is similar to other types of trusts which regard to how it is funded, there are important provisions that must be included to help protect a beneficiary’s eligibility and access to federal benefits.

For example, disabled individuals often receive government assistance via Social Security disability and Medicaid. However, these federal programs have strict income requirements that, if exceeded, render an individual ineligible to receive benefits. By funding a trust rather than leaving assets to a disabled child via a will, a parent can not only ensure they don’t exceed federal income requirements but they can also establish very specific directives for how trust assets are to be distributed and used.

For example, a parent can direct a trustee to use trust assets to provide for a child’s basic living necessities, rent or mortgage payments, education, transportation, medical and dental care and long-term care needs. Due to the specific requirements that must be included to protect a beneficiary’s eligibility for government assistance, establishing a special needs trust requires deep legal knowledge and know-how and parents are advised to contact an estate planning attorney.

Source: FindLaw.com, “Special Needs Trusts FAQ’s,” July 28, 2015