Estate planning can seem daunting to anyone. But for parents of special needs children, it’s particularly serious. Families in Kentucky should understand the role a special needs trust can play in a disabled child’s life.
The basics of special needs trusts
Trusts are a great instrument to consider for estate planning. They’re legal entities that usually involve three parties. The person forming the trust can control how it’s structured. He or she designates the other two parties involved: the trustee and the beneficiary. The trustee is someone who acts in a fiduciary capacity for the beneficiary. This means that he or she acts in the beneficiary’s best interest, not in his or her own.
When it comes to a special needs trust, the trustor would typically be the parent. Recently, though, it became possible for disabled people to fund their own trusts. The trustee must be someone who’s over 18 and competent to manage his or her own affairs. The beneficiary can never be a trustee of a supplemental needs trust. People have wide latitude when naming a trustee. It can be best to go with a professional like a lawyer, accountant or banker.
Special needs trusts make it possible for disabled people to retain their eligibility for benefits programs while still enjoying some extra comforts. For example, a special needs trust can be used for qualifying expenses like transportation costs or extra caregivers. In general, special needs trusts are irrevocable. This means it’s harder to modify them than some other kinds of trusts. It does, however, provide some protection against creditors.
Funding a special needs trust for a disabled child is as important as designating a guardian for a minor child. It’s a good idea to get help from professionals when creating a supplemental needs trust. Revisiting the trust every few years to update its language is also advisable.