As you get older, you may start to realize that you're going to have to find a caregiver for your adult child with special needs. While they can take care of themselves most of the time, the truth is that they may still need support and someone to watch over them.
Along with this, you want to make sure that they and their caregiver have the financial support that is needed. That's why you may have been looking into using a special needs trust.
A special needs trust is a good way to allow your child to get the financial support they need without impacting their ability to obtain benefits from the state or federal government. With a special needs trust, you won't impact their eligibility for benefits through the Social Security Administration, Medicare or other sources.
Why use a special needs trust instead of willing assets directly to your disabled child?
If you will assets directly to your child, you risk increasing their estate so much that they won't qualify for government benefits. When you use a trust, the assets are technically held out of your name and out of your child's name. As a result, they aren't considered part of your child's estate or income for the purposes of qualifying for benefits.
The special needs trust you create will have a trustee that controls it. That person will distribute the assets that your child needs if and when necessary. For example, if you ask for $400 to be distributed monthly for cleaning services or housekeeping, then your trustee can do that. If you ask that the trust is used for additional education, your trustee can pay the schools or individuals who are educating your child in the future.
A special needs trust is also beneficial if your child has to go into nursing care or assisted living. With the trust, they can still qualify for Medicaid, and they won't have to spend down their assets. This means that they can still get the money or assets in the trust without affecting their ability to get quality medical care support and benefits. They will still be able to get the extra financial support you wanted to leave them, making their time in the facility easier by allowing them to have the little extras, like going to the hair dresser or buying items for their room. Your attorney can talk to you more about the importance of a special needs trust if your child is disabled.