Parents thinking of setting up a special needs trust for their child need to consider three specific areas of concern before moving ahead, Estate Planning attorney Dennis Toman revealed. —
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The founder of The Elderlaw Firm in Greensboro, NC, pinpointed what parents need to address: what the trust will be used for, how it will be funded and who will administer it.
“Setting up a special needs trust is complicated,” commented Toman. “But they might be the only solution for families to ensure ongoing quality of life for their children with disabilities.”
One question parents need to consider is what the trust will be used for. He said: “Special needs trusts allow a child to be eligible for government assistance programs while still receiving trust money. But receiving an outright inheritance for a special needs person could result in loss of government benefits like Medicaid and Supplemental Security Income.”
Trust money could be allocated to areas not covered by government programs such as insurance, transportation, equipment, or for further improving quality of life, including activities such as going to the movies, a vacation or a computer.
Toman said another tricky question is how parents plan to fund the trust. He commented: “The earlier a trust is created, the easier it is to start putting money away to benefit your child with special needs. If both parents are healthy, it might be a good idea to make the special needs trust the beneficiary of any life insurance policy or retirement benefits.
“Parents with special needs children could also consider asking extended family and friends to leave gifts and inheritances to the trust.”
Deciding who will manage the trust is also essential. “While you’re alive, you’ll be able to manage the trust. However, after passing, those responsibilities will fall to someone else to ensure your trust will be executed the way you want and intend it to be,” he said.
Toman recommends, depending on the size and complexities of the trust, considering a neutral third party, like a professional trustee or a team of advisors, instead of opting for family members to manage the trust.
“Many people decide to put their other children in charge of a trust, but it can often lead to complications,” he warned.
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Release ID: 89052225