If you have a child with a disability, you may create a special needs trust to provide support after your death. As reported by CNBC, trusts may include money or property used to support a special need while also protecting its beneficiary’s income.
By naming the trust in your will, you may list the assets that you want the trust to own. During probate, your personal representative may work with the court to transfer titles to the special needs trust. You may also fund the trust with proceeds from an insurance policy.
Creating a special needs trust
As Forbes notes, grantors may establish a trust and name a trustee to manage it for a beneficiary. You may name yourself, a relative or a third party as a trustee.
An effective trust requires documentation that outlines its purpose and use of funds. Your documents, for example, may provide instructions on caring for your child’s medical, prescription or housing needs. You may also include instructions for routines and habits, such as meals or dietary preferences.
Managing the trust’s assets
A trustee’s duties involve managing the trust’s assets on behalf of a beneficiary’s best interests. The trust’s instructions may highlight how the money could pay for medical or dental costs not covered by a beneficiary’s health insurance plan. Additional instructions may outline paying for a beneficiary’s rehabilitation services or personal care providers. It may also include instructions for spending the trust’s funds on a beneficiary’s vacations, monthly bills and education expenses.
When you die, your named co-trustee may take over the trust and follow its instructions. With some careful planning, your child could have a viable and long-term support network after your death.