There are a million different things that a special needs parent or caregiver worries about each day. The most common question faced by special needs parents and caregivers is, “What will happen to them if I am not here?”
Today, 72 percent of parents and caregivers have not named a trustee for their child. Many have not even formally planned their future care or guardianship.
Starting a special needs trust has many benefits for parents and caregivers. Here is everything you need to know about a special needs trust.
What is a Special Needs Trust?
A special needs trust is a rollover of money for a special needs child or individual.
In 2016, President Obama signed the 21st Century Cures Act. This changed the wording to existing laws about special needs trusts.
This empowered special needs children and adults to get funding through a trust. That funding would be on top of any existing social assistance they were already on.
With this trust, an individual can get their public help, and their extra money too. This is true even if they get an inheritance or life insurance payment after you are gone.
Knowing an attorney can help you protect yourself and your child in the case of divorce or another kind of loss will help you both sleep better at night.
What Kind of Trusts Are There?
There are several kinds of special needs trusts. The most common ones are self-settled trusts and pooled trust.
In a self-settled trust, the individual creates the trust themselves from their own money. If it is a minor, a parent or caregiver must establish the trust, and determine when the child can access it.
A South Carolina probate court must approve that. The 21st Century Cures Act says that those that are no longer minors can do their own trust without a court’s approval.
A pooled trust typically occurs when the individual is over 65 and establishes the trust on their own.
Key Benefit of Special Needs Trusts
There are multiple benefits of special needs trusts. The greatest benefits are a peace of mind and fewer sleepless nights.
When you put a trustee in place, you have one less job to do. This gives you more respite, or break time, in your daily life. This supports not only you, but it also supports your child or special needs individuals in establishing their own line of financial independence.
An adult individual with special needs will probably be on public assistance at some point. You may name them as your beneficiary on life insurance or estate planning.
Having a special needs trust is better, as this will protect those assets when the time comes. Sometimes, they could be cut off of public funding if they get a large inheritance or estate gift.
Many special needs parents say the benefits of a special needs trust will outweigh the risks or initial investment. You want an expert to help you with this.
Explore Personalized Strategies
Many special needs adults cannot work. These are the families with the highest poverty rates. By setting up a special needs trust, you are protecting their future.
Do you have questions about setting up a trust? Contact Indigo Family Law and set up a consultation where we can explore your options.