According to research, there are around 1,127,181 disabled adult children in the U.S. If your child is among these children, you may want to request a probate lawyer to help you set up a special needs trust. Such a trust will help you ensure that your child continues to get financial support even in your absence. Below are more details on this type of trust.
What Are Disability Trusts for Special Needs Adult Children?
A disability trust for a special needs adult child is usually a type of legal arrangement that can help you ensure that your disabled child receives the financial support they need even after you die. When you set up this kind of trust, you will not have to worry about reducing your disabled child’s eligibility for the disability benefits offered by public assistance programs.
It is important to set up this trust for your disabled child, especially if they receive the support offered by the government to individuals with disabilities. For instance, setting up this trust should be a priority if your child receives supplemental security income, Medicare, or Medicaid. Setting up the trust will help you pass assets to your child without necessarily raising their income which could trigger loss of eligibility for the financial aid offered by the government.
Who Can Use Disability Trusts?
You should set up a special needs trust for your child if they fall in any of these categories.
• The child is terminally ill.
• The child has a mental health condition.
• The child is suffering from a chronic health condition.
• The child is battling alcohol or drug addiction.
• The child is generally not self-sufficient.
• The child is a chronic gambler.
How Disability Trusts Work
You should choose a trustee when you decide to set up a special needs trust for your disabled child. This trustee will have complete control over the disability trust. The trustee will oversee the disbursement of funds placed into this trust and its overall management. The party will also ensure that the funds and assets held in the trust do not pay for shelter and food expenses.
If the disabled child has assets and the assets are placed into the disability trust, these assets will be subjected to the repayment rules of Medicaid. However, if all the assets placed into the trust belong to the child’s parents or any other third party, the assets will not be subject to any repayment rules.
How the Money You Set Aside in a Special Needs Trust Will Be Used
Giving your disabled child funds will increase their income, triggering loss of eligibility for disability benefits. That is why money put in special needs trusts is not given to disabled people directly. Instead, it is used to cater to the expenses not catered for by Medicaid, Medicare, and supplemental security income. Some of the expenses that will be paid using the special needs trust income include:
• Dental and some other medical expenses
• Recreation and entertainment services
• Payments for personal care attendants
• Cars
• Traveling costs
• Education
• Home furnishings
• Rehabilitation Services
You can request your trustee to give your child funds directly if need be. In such a case, the trustee should ensure that the funds given to the beneficiary are not much since they will still be counted as income.
The Benefits of Disability Trusts
Setting up a disability trust for your disabled child will benefit you and the child. For instance, when you set up this trust, you will get some reassurance that your assets and money will be used to help your disabled child even after you die.
Setting up a disability trust for your disabled loved one will also help reduce the potential for financial mismanagement or abuse. For instance, think about a situation whereby your adult child is addicted to drugs or gambling. If such a child gets a cash inheritance, they are likely to use this money to feed their addictions. However, if you set up a special needs trust for this child, the chosen trustee will ensure that this child’s inheritance is only used for the intended purposes. That will reduce the chances of financial mismanagement or abuse.
According to law, money and assets put in special needs trusts can never be seized by lawsuit winners and creditors since these trusts are usually irrevocable. Therefore, when you set a special needs trust for your disabled child, this child’s inheritance will not be available for judgment and creditors. However, if your child’s inheritance is not put in a special needs trust, the inheritance may be seized by creditors, or people can use it for legal judgments.
How to Set Up a Disability Trust and Why You Need a Probate Lawyer When Setting It Up
Setting up a special needs trust is not complex. To begin the process, you need to set money and assets aside that you will use to fund the trust. If possible, set aside around $100,000 since this trust’s maintenance and setup fees are usually high. The amount of money you will set aside for this trust will depend on how disabled your child is and the amount of care this adult needs. Consult your financial team if you experience any difficulties while deciding the amount of money to set aside for the trust.
After settling on your funding level, look for a probate lawyer. The chosen probate lawyer will help you set up a trust that favors the specific needs of your disabled child. After setting up the special needs trust, choose a trustee.
You should be careful when choosing the trustee since this person will be the trust administrator. They will be the one to authorize the dispersion of money and assets from the trust. That is why you need to ensure that you choose a person who will have the best interests of your disabled child at heart. Your lawyer can help you make the best choice. The trustee can decide to work with your financial advisor.
If you want to improve your disabled child’s quality of life, set up a disability trust for this child. Setting up this trust will help you offer financial support to your child while still preserving this child’s eligibility for special needs benefits. You should, however, ensure that the trust’s administrator is a person who will look out for the best interests of your child.
