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How can a special needs trust help disabled children as they age?

New Jersey parents of children with disabilities love their children and want to provide them with the best care possible. They may rely on government benefits to assist in meeting their child's health care and life needs. But, as parents age, they may have concerns about how their child will be cared for once their child is an adult, and especially after the parents pass away. They will want to see that their disabled child is taken care of financially, but also that the child still receives the government benefits they need to maintain a good quality of life. A special needs trust may be the estate planning vehicle that addresses parents' concerns in situations like this.

Many government benefits are only available to those with few assets and a minimal income. However, in a special needs trusts, parents are able to fund the trust with their disabled child being the beneficiary, while still allowing the child to qualify for government benefits. The funds in a special needs trust can be used to pay for expenses that government benefits do not cover.

Unlike an inheritance one would get via a will, funds placed in a special needs trust may not be considered a source of income when it comes to qualifying for government benefits. This is because it is the trustee who manages the trust assets, not the disabled child. This is important since, for many government benefit programs, the more a person has in assets and income, the fewer benefits they will receive (if any at all.)

When deciding to execute a special needs trust for a disabled child, parents will want to keep a few points in mind. They will need to ascertain whether their child will be able to live independently. Parents should also collect all documentation regarding their financial assets. Finally, parents will want to work with an attorney who can assist in setting up the trust.

Special needs trusts may be the answer for some parents of children with disabilities. However, a special needs trust is a complex legal document, and parents will want to make sure they are working with someone who is able to make sure the final result is legally sound.

Source: CNBC, "How to set up a special needs trust," Mark Henricks, Oct. 25, 2017

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