Parents with special needs children have to worry about issues and make decisions that parents of more typical children will never face. There are issues with obtaining quality childcare and proper medical assistance for a child with physical disabilities. There are also issues that arise about later-in-life care for children with disabilities and special needs. Conditions like Down Syndrome, Autism or other developmental disorders could leave a child dependent on care for life.
As a parent, there is nothing more terrifying than the idea of your child alone without support after you die. Far too many aid programs focus on the needs of caregivers, rather than promoting autonomy in special needs children and adults. That can leave parents fearful about the future their child can expect when he or she no longer has parents helping. Even if you assign assets for your child in your last will, you may worry about how long those assets will last. Creating a special needs trust could provide you with peace of mind and your child with support after your passing.
Issues a standard last will cannot address for special needs families
Even those without special needs can make poor decisions when it comes to an inheritance. Receiving a massive lump sum of money at one time can result in frivolous spending and a loss of one's inheritance. Combine that potential impulsivity with a difficulty understanding the consequences of actions, and you have a recipe for a devastating financial future for your special needs child.
Some parents choose to name the guardian or caregiver of a special needs child as the heir instead, hoping to ensure the money is spent frugally and properly budgeted. The problem with this is that even someone you trust could do something irresponsible when there's a large amount of money concerned. You don't want your special needs child subject to abuse or deprivation due to not controlling his or her own assets.
What a special needs trust can do
A special needs trust can allow the testator to create specific terms and conditions for the use of the inherited funds. This can help prevent cases of abuse, theft and squandering of assets. You have the power to name a trustee or several, who must approve any use of the funds within the trust.
It's also important to note that a special needs trust can help ensure your loved one remains eligible for Medicaid and other social support programs. Instead of receiving a lump sum, which is subject to taxation and even seizure to cover state aid payouts, a trust allows for moderate financial support over time, reducing that tax liability and allowing your loved one to receive needed aid after your passing.