If you want to know how to ensure the financial security for your special needs child, then you must use much caution to ensure you handle the process correctly, and a trust may be the most effective method.
It is understandable that you want the safest future for your special needs child and to have a strategy prepared. Understanding how to create a well-prepared plan is useful for increasing the financial security of your child’s life.
Explaining a special needs trust
Special needs trusts are legal documents that determine the assets a disabled child will receive. The following are the three individuals that are part of developing this document:
- The special needs child who is the beneficiary
- The person funding the trust
- The trustee who will manage the trust
Developing this document may help to ensure your child receives funds on a regular basis and maintains financial security stability.
Ensuring eligibility for public benefits
To ensure your child still qualifies for public benefits, a trust may be the option you need as it allows the child to maintain eligibility for public benefits, although it is important to know that a special needs child cannot have more than $2,000 in the bank at a given time.
A trust ensures the assets belong to the child; however, since the funds are not readily available, the child still meets the necessary financial limitations to receive Social Security and Medicaid and other assistance, such as supported housing and vocational rehabilitation.
Appointing a trustee
Appointing a trustee to manage the finances for a special needs child may be an effective way to ensure the security of the child’s financial future.
If you include rules that restrict how much money the child receives at a time, that may provide added safeguards against misuse of funds, although it is imperative to choose a person who will manage the trust with the child’s best interests in mind.