Caregiving and Your Financial Health
How to make it work and give the best care Read more
Initiate the trust as soon as you determine that your child may not be capable of supporting himself. If your child's development improves and he is able to earn a living, great—the trust can always be dissolved and the funds returned to you or given to the child. Special-needs trusts are complicated animals, however, and rules vary from state to state. You should find a financial planner who deals specifically in this area of the law.
How do I fund the trust?
Although you can fund the trust with your estate or the proceeds of a life insurance policy, Ron Pearson, a certified financial planner in Virginia Beach, Va., who specializes in families with special-needs children, recommends that you do it throughout your lifetime. Should you die unexpectedly, the trust will already be operational and able to provide your child with money. You should also inform your extended family about the trust so that relatives don't inadvertently disqualify your child. Aunt Edna's thoughtful $10,000 inheritance should be left to the trust, not the individual.
How will my child use the trust?
The money is doled out by a trustee, either yourself or someone you designate. The funds can be used anytime, not just after your death. For instance, you might make use of government programs to provide basic expenses like medical care and housing, while using a special-needs trust for "enhanced care that improves the quality of life," says Pearson. Pearson, the father of two developmentally disabled sons who live in a group home, says he gives his sons money from their trusts that they mostly spend on country music CDs. You could also use the money for medical equipment or care that Medicaid doesn’t cover.
