What can your special needs trust pay for?
As you probably know, a child who has special needs, often receives government benefits. And if you have a child in that situation, you need a special kind of estate plan. A simple will that just gives the money to your child is not going to cut it - you could be endangering the government benefits and then they would be cut adrift with only the money left under will to live by and chances are nobody to help them manage it.
What you can do to get around that problem is to create what's called a special needs trust.
Three Types of Special Needs Trusts
There can be three main kinds of special needs trust that we tend to work with:
Regardless of what kind of trust you use, the most important part is to make sure that you're not endangering your child's government benefits. For example, there are some things that your special needs trust cannot pay for:
- Food
- Shelter
- Clothing
- Medical care
These four things are covered by their government benefits. And if you leave money behind for them, whether it's a trust or whether you're giving it to them directly, that can be used for those types of expenses, then the government will stop paying the benefits. And of course, if the money runs out that they inherited from you, your child who has special needs needs may not be able to go back and get new government benefits from the government once it's done. And even if they can, are they in a position to be able to do that on their own if you're already gone?
What Can a Special Needs Trust Pay For?
So my clients also commonly asked me if we know what it can't pay for, what can it pay for? Some examples of things your special needs trust can pay for:
- Transportation expenses, vacations and travel.
- Starting a business ~ which is one of those things a lot of people ask me about, why would my child with special needs want to start a business? You would be amazed, depending upon what your child's interests are, and what they really focus on, that there may be a business that is a great fit for them. I know of somebody whose daughter with special needs started a dog grooming business, and she is doing a fantastic job. Now she needs help running the business. She needs a lot of support. But at the same point, she is able to own this business and run this business because when she gets in there into work, she's grooming the dogs, and that's what she loves to do. Her smile lights up the room. And that's a great use of funds for a special needs trust.
- Medical expenses that aren't covered by the government benefits, things like therapy or rehab.
- Education and training that your child could use.
- Technology that would help them.
- Hiring a lawyer ~ if they run into any kind of legal trouble, they've been in some kind of an accident and they have to have a lawsuit and they need an attorney to represent them to make sure they get a good result.
- Certain kinds of insurance they need that wouldn't be covered by government benefits.
Because you've got a child with special needs, you know how important it is that their benefits are protected and that we make sure we leave a legacy for them.
If you want to look at what kinds of things your special needs trust can pay for or you're not sure and you want to talk it through further, let's set up a Legal Strategy Session to review the best options for you and your family. It's very important when you're setting up a special needs trust that you know what that special needs trust can pay for.
