Many families with special needs children don’t think about creating a special needs trust fund for their child until the child reaches legal adulthood (usually 18 years old; 19 in Alabama). The logic behind this is that if the child doesn’t currently need government benefits like Medicaid or Supplemental Security Income (SSI), there’s no hurry to establish a trust. What many people don’t realize is that special needs trusts are amazingly flexible tools that function as much more than just a protection over government benefits.
Alabama Family Trust has three reasons that parents of special needs children would be wise to set up a special needs trust for their child before the child reaches legal adulthood.
The main reason to set up a special needs trust fund while the child still a minor is to provide stability and security for the child if both parents suddenly pass away. If the trust is already in place before it is needed, then there is no concern as to the child’s well-being if something should happen to his or her parents before the age of majority. However, if the trust is not in place because the parents were waiting until their child reached legal adulthood before setting it up, uncertainty and instability may abound. Such a delay may even prevent the child from becoming eligible for government benefits.
Many parents want to purchase a life insurance policy that will provide for their child after they have died. When properly drafted, special needs trust funds can hold these policies and manage the proceeds once the parents are gone. Since parents may begin funding a life insurance policy long before their child reaches the age of majority, it makes sense to begin doing so as early as possible and to establish a special needs trust to hold the policy — even though the child is not yet receiving government benefits.
If relatives of the child want to offer financial gifts for the child’s well-being, a special needs trust fund is the ideal place to hold those gifts since the assets will then be properly managed. Additionally, relatives who want to leave an inheritance to the child can leave their assets to the trust. Placing these gifts into a special needs trust as opposed to simply depositing them into a bank account for the child will ensure that once the child is receiving government benefits, he or she is not penalized for having large sums of money in his or her name.
Need Help? Alabama Family Trust Can Set Up Your Special Needs Trust Fund!
If you’re ready to set up a special needs trust fund for your child, or if you simply want more details on what the process is like, contact Alabama Family Trust today. We are here to help you secure your child’s future!