Maybe your child was born with a condition like cerebral palsy that requires extensive daily support. Perhaps they fell very ill early in childhood or got into a car crash when they were teenagers and now have significant medical support needs.
As a parent of a child with special needs, you have more considerations to address than the average parent in Colorado. You need to think about your child’s independence and their safety if anything happens to you. A special needs trust is a powerful tool for family members who want to provide both financial support and personal guidance to a loved one with special needs.
How can you set aside adequate funds to offer meaningful support in the form of a special needs trust?
Arrange for funding when you die
Maybe you have a sizable term life insurance policy, or perhaps you would like the trust to own your family home so that your child can live there until they die. Many people make initial plans for their trusts early in life and then arrange for the funding to occur after they die, which is a viable strategy for many families.
Make strategic contributions over time
You can theoretically fund a special needs trust much like you would a retirement account. You can earmark a certain amount of each paycheck or take the money that you earn on your investments each year and transfer those dividends to the trust. Your sources of income and your budget will determine exactly how much you contribute and how frequently you do so. A little bit added to an account every year over time can make a big difference.
Use your child’s inheritance to fund their trust
If you have four children and would intend to split your assets evenly among them in a different situation, you can integrate that approach into funding your special needs trust. You can withdraw a certain amount of money that you feel represents an appropriate share of your personal holdings now to separate them out and create a trust for your child that can support them both as they grow older and wish for more independence and after you die and they require more support from others.
Employing a creative approach to the funding of a special needs trust can help you set aside sufficient assets for a loved one’s protection without straining your own financial solvency.