When you have a child with disabilities, planning for the future can be complicated. But it is even more critical for parents to plan for a time when you will not be there to care for and advocate for your child. If you make careful estate planning choices now, you can prepare for your child’s future care and financial needs.
Some of the best options for future planning involve trusts. Supplemental (Special) Needs Trusts are often used in Texas to plan for future support of special needs children.
Supplemental (Special) Needs Trusts
Supplemental (special) needs trusts are the most effective trusts used for children with disabilities. This trust manages assets but also keeps your child eligible for additional resources and public assistance. There are two different types of special needs trusts:
Third-party Special Needs Trusts
Typically, a parent, grand-parent, or legal guardian funds a third-party special needs trust with their assets as part of an estate plan. The trustee typically distributes these funds as part of a will or living trust.
First-Party Special Needs Trusts
A parent, grandparent, or a legal guardian usually creates this trust using the child’s assets. This type of trust is common when a child receives a legal settlement from a personal injury lawsuit or other claim and will need life-long care. If any funds remain in the trust after the child’s death, they revert to the state, but only to the extent that the child received public benefits.
You can also fund special needs trusts with the proceeds of a life insurance policy, or you can make one a sub-trust as part of an existing living trust. Supplemental needs trusts can be a critical component of planning for the future of your child with a disability.
Support Trusts
A support trust requires that the trustee distribute funds to the beneficiary for food, shelter, clothing, medical care, and educational services. However, beneficiaries of support trusts are ineligible to receive Medicaid or Social Security Income (SSI). So, a support trust is not the best choice if your child will need those services.
If you are concerned about planning for your child’s future, legal, educational, and financial necessities, we can help. Your Legacy Legal Care offers comprehensive estate planning services to ensure your loved ones are protected. Call us at (281) 885-8826, or click here to schedule a strategy session to discuss your options.
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