Securing the Future For Your Disabled-Handicapped Child Through a Special Needs Trust

If you have a disabled or handicapped child, you worry about their future. Your mind races with question after question. Who will take care of our child if we die? How will our child be cared for? Will government benefits be adequate? What if government benefits end? Will our child obtain adequate medical attention when we are no longer around? Who will be our child’s guardian? If you do not have the answers to these questions handicap placard you should be worried. Even if you are a family with limited means you can secure the future of your child through an instrument called a Special Needs Trust. A Special Needs Trust provides the financial infrastructure that blends the public support you receive from the government with private support from the family. If you have a disabled or handicapped child, a Special Needs Trust is a necessity. Not having one guarantees an uncertain future for your child.

A Special Needs Trust gives you the ability to coordinate public benefits your child receives from the government with private resources. It is a marriage between public and private funding for your child in the event you are not longer able to provide care for your child. Careful planning for a Special Needs Trust can allow your disabled child to become and remain eligible for need-based government benefits, such as Medicaid and Supplemental Security Income, while permitting the use of personal family resources that can be used for nonbasic needs and quality of life extras (vacations, sporting events, camp, travel expenses, games/toys, entertainment, grooming supplies, uninsured medical or dental services etc).

General Support Special Needs Trust – This type of Special Needs Trust is designed to serve as the primary source of benefits for your child. It is suited for families with the financial means to provide the best care money can buy. Such a trust does not rely on public support for any part of their child’s welfare. It may be funded through a will, ongoing lifetime gifts or life insurance.

Supplemental Care Special Needs Trust – This is the most common type of Special Needs Trust. It is designed to maximize the use of public funds to provide for the basic needs of their child. Public support is the primary or sole source of benefits for your child, with this type of trust. It is designed to allow your child to become and remain eligible for government benefits. Families with limited financial resources are the ideal candidates for this type of trust. It may be funded through a will, ongoing lifetime gifts or life insurance. Many Supplemental Care Special Needs Trusts are funded primarily by “second-to-die” life insurance policies, which covers both parents, and pays out upon the death of the second parent.

In order to qualify for Supplemental Security Income Benefits (“SSI”), your disabled child cannot hold more than $2,000 in assets (excluding a car and a home). SSI benefits average about $400 per month and this money must be spent on basic needs (food, clothing and shelter expenses). Eligibility for SSI also qualifies your child for food stamps and Medicaid. Furthermore, Medicaid eligibility also qualifies your child for many local community services, as well. The Special Needs Trust provides for the needs of your disabled child without disqualifying him or her from receiving SSI and Medicaid.

The trust document requires that you designate a trustee to oversee the trust. This trustee may be a family member, a financial institution, a financial advisor, a committee or a family friend. This document must clearly set forth that the trust funds may not be used on basic needs (food, clothing or shelter). Violating this directive means the potential loss of government benefits.

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