If you are a parent with a special needs trust, you likely understand how critical it is to prepare for the future. After all, these trusts make sure that a child continues to receive financial support in case you die or become incapacitated. These trusts are also particularly helpful because directly transferring assets to a special needs child outside of a trust can result in the discontinuation of government benefits.
Deciding the amount of funds to place in a trust, however, can be difficult. That’s why this article reviews some of the important details you should consider when funding a special needs trust.
# 1 – Housing Costs
Among the numerous costs associated with a special needs child, one of the most uncertain and potentially largest factors are housing costs.
If you plan for a special needs child to live in a private group home, there are several options you should consider. For example, it might be a wise idea to purchase a condo unit located in a building that provides services for special needs individuals.
# 2 – Food and Daily Living Costs
One of the largest costs involved with planning for a special needs child are the fees associated with things like food, staffing, and utilities.
By deciding on this amount now, you can make sure that an adequate plan is created to pay for a special needs child’s numerous expenses.
# 3 – Expect Costs to Increase
After a person dies, a budget often will increase because any services that the parent provided must now be paid for.
While it is impossible to replace the invaluable bond between a parent and a child, it is possible to create an estate plan that takes these various increases in costs into consideration.
In many cases, there are also important legal and trust administration issues to take into consideration following a parent’s death.
# 4 – Public Benefits Can Play a Valuable Role
Public benefits are often advantageous and can help offset a number of these costs.
Many special needs children are eligible for Supplemental Security Income (SSI) in addition to Section 8 housing and SNAP food assistance. Following the retirement of a parent, SSI is often replaced with Social Security Disability Insurance (SSDI).
While these payments often decrease following the death of a parent, they still continue to play a valuable role in supporting a special needs child.
# 5 – Income by the Special Needs Child
While not all special needs children are capable of working, some do. If a child is capable of working, this income is frequently used to reduce some of the various costs that are known to arise.
It is critical to understand the interplay between estate plans, income by the child, and any government benefits that the child might receive. For example, if a special needs child makes enough money, this amount could reduce government support but require a large amount of estate planning funds in the future.
Speak with an Experienced Estate Planning Lawyer
It is critical to perform detailed analysis of all the costs a special needs child is likely to face. After this analysis, you can then engage in sufficient estate planning to make sure that the child receives adequate protection.
If you have questions or concerns about the estate planning process, you should not hesitate to speak with an experienced estate planning lawyer. Contact Ettinger Estate Planning today to schedule a free case evaluation.