California families with special needs children understand and embrace the joys that such children can bring to their lives. Seeing the world through their eyes can be a gift, and most families would not change their family dynamic for anything. That said, there are certain challenges that a special needs child can face that will mean a lifetime of specialized care. Many families are concerned about what will happen when the parents are no longer able to provide that level of care. This is where special needs trusts can make a world of difference.
A special or supplemental needs trust works much the same way as any other form of trust, but with the goal of providing financial support for a child’s particular set of needs. Assets placed within the trust become the property of the trust itself, and they are therefore protected from loss to creditors, lawsuits or legal matters related to divorce. Many parents choose to purchase life insurance that will be used to fund the trust.
Once the parents pass away, funds from the trust can be used to cover the cost of residential or assisted living care for the special needs child. For special needs children who are receiving public benefits, there is a special form of trust that will allow them to continue to qualify for assistance even after the death of their parents. These trusts are known as self-settled special or supplemental needs trusts. They have many rules and regulations, but they can offer a good solution for many families.
When it comes to providing for the care of a special needs child, California families know that the best approach involves a great deal of pre-planning. Trusts are excellent tools for setting aside wealth to assist with special needs, and they have the added benefit of removing assets from a family’s taxable estate. Those interested in learning more about these and other options should make an appointment to meet with an estate planning attorney to discuss the matter in depth.
Source: The National Law Review, “Special Needs Children??? How Divorce Can Impact Your Estate Plan“, Catherine F. Schott Murray, June 9, 2016