Maybe you have a child in your family who was born with Down syndrome and who requires support despite technically being an adult. Perhaps a child in your family experienced pediatric cancer or a teenage car crash that left them with a serious brain injury. There are many reasons why a member of your immediate family struggle with independent living and may require support from you for the rest of their life.
A special needs trust is a powerful tool to help those who care about a person with special needs support that individual. It is a noble thought to want to provide resources for someone who will never fully support themselves, there are important considerations that you cannot overlook when creating a special needs trust.
The benefits the trust beneficiary already receives
There are numerous kinds of state benefits that can help those with disabling medical conditions. For example, Medicaid can pay for health care costs. There are also cash benefits and housing benefits that can make it easier for an adult with special needs to live a semi-independent life.
Those creating a special needs trust need to look carefully at how they structure the trust. Large disbursements in a short amount of time might lead to a beneficiary with special needs becoming ineligible for crucial state benefits. Applying careful limits to the distributions from the trust will be a necessary step if you want to protect someone from the hardship created when they lose state benefits.
The possibility of financial abuse
When someone cannot advocate on their own behalf is the beneficiary of a trust with sizable financial resources, other people may try to manipulate them to gain access to those assets.
From fraud to interpersonal abuse, there are many ways in which even a carefully-structured trust could lead to financial abuse of the beneficiary. Being very careful about the trustee that you name and including provisions that will limit the risk of someone abusing the beneficiary can help protect the person who will receive assets from the trust in the future.
Funding a trust can also be a challenge, especially for working-class and middle-class adults. Life insurance and real property are among the valuable resources that can help fund a special needs trust for a child if anything were to happen to you. Including the right terms in a special needs trust will help maximize the benefit that it generates for your vulnerable family number.