How A Baby Changes A Parents Financial Strategy Special Needs Trusts
Having a child is a wonderful, life-changing event. A parent’s priorities shift suddenly from their own well-being to their child’s, hoping he or she grows up healthy and strong.
Raising a child, however, requires a lot of effort and can be expensive. As a result, it is important for parents to consider the financial impact a child will have on their lives. Certain items to consider include child-care costs, college savings plans, hospital bills and other daily expenditures.
Financial planning for a disabled child
Many children are diagnosed with physical or mental disabilities. These conditions can place added financial strain or worries on parents. Luckily, several products and services are available for parents of a disabled child to help them prepare for their child’s future.
An experienced special needs attorney can provide guidance and recommend the correct product or service to best suit each family’s particular needs.
Special needs trusts: Advantages and benefits
One beneficial product for parents of a disabled child is a special needs trust. A special needs trust allows parents to provide for a disabled child while maintaining SSI (Supplemental Security Income) and Medicaid eligibility.
Because many government programs have maximum income requirements, a special needs trust allows a child to maintain eligibility for SSI and other government programs.
Special needs trusts essentially shield assets from the government and prevent them from counting as income or capital for their child.
Additionally, assets within a special needs trust are not subject to creditors. Therefore, if a child incurs debt, parents can be assured the trust’s funds will be available to care for the special needs individual.
Finally, because parents select a trustee when they set up a special needs trust, the funds are guaranteed to be used for the care of the beneficiary. A trustee has a fiduciary duty to responsibly manage the trust and provide disbursements for the benefit of the disabled person. Merely leaving these assets to a family member or friend does not provide the same worry-free guarantee as a Special Needs Trust.
Contact a local disability or special needs attorney to further explore the benefits a special needs trust can provide to families of a special needs child.