When you have a child with special needs, there are a lot of extra considerations you need to factor into your estate planning. One of the biggest examples of this is the creation of a special needs trust. You’ll need to spend some time thinking about how much it will cost to provide for the child, both while you’re alive and after your death.
Here’s some information from a special needs trust lawyer in Phoenix, AZ about how you can best manage your special needs trust.
What is a special needs trust?
A special needs trust allows a person with a disability to continue receiving certain government benefits, so long as that trust is properly established and maintained. When a person owns more than $2,000 in assets, he or she is no longer qualified for some types of government benefits. However, assets held in trust do not count toward that $2,000 amount, so it is a way for you to ensure your child gets their inheritance without losing the government benefits they need.
Even if your child does not receive any government benefits, a special needs trust is still a good idea if you want to protect those trust assets, or if you’re worried about how your child would manage the trust funds without the assistance of a trustee.
Funding the trust
In most cases, the special needs trust will not be funded until after the parents have already passed. At that point, the trust will then be required to file a tax return and pay any applicable taxes (generally only for higher trust levels) each year. There are also ongoing legal and trust administration costs. Even if a family member serves as trustee, it’s a good idea to still regularly consult a special needs trust lawyer in Phoenix, AZ, especially when disbursing funds.
Most of those ongoing costs can be offset by any public benefits the child receives, such as Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), Section 8 Housing vouchers and SNAP food assistance. But beyond the government assistance received, what else will go into the decision of how much to place into the special needs trust?
One of the factors you’ll need to take into account is the level of care required by the child. If the child requires round-the-clock supervision, there are going to be higher housing costs, plus staffing costs to consider. A child who is generally able to manage their own affairs but needs some assistance with certain tasks will not require quite as much to be put toward housing. Consider also the many other expenses the child will need beyond just the standard daily living expenses that we all budget for—any special medical care or therapy, care coordination and advocacy costs, and anything else a child with special needs might require that other people might not necessarily need.
We strongly suggest talking to a special needs trust lawyer in Phoenix, AZ for more information about funding a trust if you have a child with special needs. Contact Lyman Law Office today to learn more or arrange a consultation.
Categorized in: Special Needs Trust Lawyer