Most parents consider how they will include their children in the estate plan. If you are the parent of a special needs child, it is even more important to plan for your child’s future.
Sometimes, Medicaid or Supplemental Security Income benefits do not cover a person’s needs. According to U.S. News, a trust can supplement their benefits.
Choosing a special needs plan
When it comes to deciding what your child’s financial future will be, there is a lot that you have to take into consideration. There is no one-size-fits-all estate plan, but you can learn from others who have had to go through similar experiences. Choosing the estate plan that will benefit your child’s future depends heavily on his or her circumstances now and the circumstances that you can foresee.
You need to ask yourself whether he or she has the capability of holding down a job. Will he or she ever be able to work? Is there a family support system available to the child?
Understanding special needs trusts
There are a couple of different types of special needs trusts. The first is a first-party trust. The first-party trust receives funds from an inheritance or award. With a first-party trust, if the beneficiary dies, Medicaid may seek reimbursement from the funds in the trust. A third-party trust, on the other hand, uses funds from life insurance policies or the individual’s family member. If a family has enough funds, they can fund a third-party trust on their own.
Special needs trusts provide for children or adult children that may have disabilities or impairments that prevent them from being independent.