Special Disability Needs Trust
A Trust is created for your child while preserving benefit eligibility
If the disability looks to continue into the child’s adult life, a supplemental or special needs trust can be created for the child.
This trust is created for a special needs trust while preserving government benefit eligibility, as the assets held in trust do not belong to the beneficiary.
The drafting of the trust is extremely important because the benefits of the trust are not supposed to supplant, but instead supplement government benefits that provide food, shelter and clothing.
A special needs trust cannot pay for room and board.
Below are some common needs:
- medical/dental expenses
- annual checkups
- transportation and vehicle expense
- training programs
- vacations, and
- a home health aide
A special needs trust is irrevocable and must be set up by parents or a third party.
The trustee has discretion to use assets for the benefit of the disabled person and must handle all distributions from the trust.
When the disabled person dies, unused assets can go to other siblings or family members. If parents feel their child might be able to handle their own finances as an adult, they can allow the trustee to evaluate competency. The assets can then be transferred to the child.
Funds of the trust may come from a structured settlement. If can also come from life insurance.
A survivorship, second-to-die policy covers both parents and pays out on the death of the second. The special needs trust can be named as the beneficiary.