When you have a child with special needs or a disability, you may have valid concerns about who is going to care for or support your son or daughter once you are no longer around to do so. Increasingly, parents facing similar circumstances are choosing to establish special needs trusts, which are specific fiduciary arrangements that allow you to leave assets behind without potentially making that child ineligible for government assistance. 

While there are several different options available to you as far as funding a special needs trust, creating one offers a number of notable benefits. 

Benefits of special needs trusts 

Many people who choose to create special needs trusts for their children do so because they are fearful that if they left assets behind in a traditional will, their value could potentially impact the child’s continued eligibility for government assistance. Many disabled or special needs individuals utilize programs such as Medicaid or Supplemental Security Income, but they must undergo means-testing to qualify for these programs. In other words, if your child has too much money available to him or her, he or she is not going to qualify for these benefits any longer, which could prove highly problematic for those who depend on them. 

How the special needs trust helps 

When you fund a special needs trust for your child with life insurance, military benefits, savings, stock investments or what have you, the assets placed inside become the official property of a third party, rather than your child’s property. Thus, your daughter or son does not actually factor in when she or he undergoes means-testing for certain benefits. This allows your child to remain eligible for such benefits while still having a nest egg to help get by. 

As a parent of a special needs child, a special needs trust may prove to be an important component of your son or daughter’s life care plan. The more you plan ahead for your child’s future, the better you may feel about leaving him or her in capable hands.