Parenting a special needs child comes with an extra share of care and responsibilities, one of which concerns your child’s future. It is essential to ensure that your child enjoys a financial safety net after you are gone.
Timely and appropriate estate planning can help provide for your child’s long-term needs. Specifically, your family may benefit from setting up a special needs trust for a disabled child.
What Is a Special Needs Trust?
A special needs trust, or SNT, also known as a supplemental needs trust, is a type of trust designed to provide for the needs of an incapacitated beneficiary. The trust beneficiary usually cannot handle their own money or practical concerns, so SNT planning sets up the trust to take care of the disabled person’s financial affairs.
SNT guidelines outline the distribution of assets to pay for the beneficiary’s medical bills, rehabilitation, living expenses, and other costs. A credible representative, like a family member or an independent professional trustee, manages the trust assets on behalf of the beneficiary and makes sure that the money goes toward appropriate expenses.
Selecting the right trustee is critical for the SNT to fulfill its mission. Choose a trustworthy, well-organized, and prepared individual to handle the long-term commitment of trust management.
The Benefits of a Special Needs Trust
A special needs trust may play an important role in ensuring your disabled child’s financial security. Specifically, an SNT can:
- Help your child qualify for public benefits. Assets or income above a certain threshold may disqualify an individual from Medicaid or Supplemental Security Income (SSI). In contrast, trust assets do not count as private assets and do not affect the applicant’s eligibility for public benefits.
- Ensure proper distribution of funds. Trust documents regulate the expenses that go toward the beneficiary’s needs. A trust is the most secure way of ensuring that funds reach their intended purpose.
- Enhance your child’s lifestyle. Public benefits like SSI or Medicaid usually only cover basic needs. A special needs trust can serve as a regulated funding source for other expenses and activities that may benefit your child.
Types of Special Needs Trusts
The main types of special needs trusts include:
- Third-party SNT. A third-party SNT forms a part of the disabled child’s parent’s estate plan. The child’s guardians may establish such an SNT through a will or a living trust.
- Self-settled trust. A self-settled trust uses the disabled person’s assets, like personal injury benefits. The state may draw payback from this type of trust after the beneficiary’s death.
- Pooled trust, or (d)(4)(C) trust. A pooled trust combines the funds of several trusts, with a nonprofit organization serving as the manager. Funds come from a third-party source, like the disabled child’s parents.
Comprehensive Estate Planning for Special Needs in North Carolina
Are you losing sleep worrying about the future of your special needs child? The knowledgeable, dedicated legal team at Salines-Mondello Law Firm can help you protect your most vulnerable family members through targeted estate planning and special needs trusts.