Minnesotans who have special needs children know that the lives of their offspring will be different. Because of advances in science, many special needs children become special needs adults who cannot provide for themselves. Setting up trusts or other financial instruments to provide for disabled children who live beyond your lifetime is essential to your children’s continued welfare.
Special needs trust is the most common
Many families with children who will need dedicated care throughout their lives choose a special needs trust for estate planning when considering their family’s future.
The two types of special needs trusts that are available are a first-party and a third-party special needs trust. The purpose of both is to maintain Social Security Disability Insurance (SSDI) benefits for special needs individuals under the age of 65, yet allow for support that allows these individuals to live comfortable lives. These two types of trust have different rules regarding penalties and payback to states after the disabled individual reaches 65 years of age. Generally, one of these special needs trusts will be sufficient for the needs of your family, but in some cases, it’s worth checking out the alternatives.
Considering alternatives to special needs trusts
Some families consider providing special needs individuals with an outright distribution of funds earmarked for them. This alternative is only appropriate if your offspring has the mental faculties to handle its management. However, you should note that this alternative can have a negative impact on government benefits.
A second alternative is disinheriting your special needs child in the estate planning process and leaving the assets to a third party to hold and manage the funds. The drawback with this route is that the designated party may use the funds for himself or herself.
Deciding on a course of action to provide for your special needs offspring can be difficult. Working with a financial advisor along with an attorney experienced in estate planning issues can provide you with a clearer path that will ensure that your special needs child will have sufficient funds throughout life.