Establishing a special needs trust for a family member with special needs can feel like an impossible feat for many parents and grandparents. Most families do not have hundreds of thousands of dollars in liquid capital to set aside in a trust.
Thankfully, financial resources are not the only means of funding a special needs trust. Concerned family members can employ a variety of creative solutions that can provide practical support for their vulnerable loved one for years after they retire, become incapacitated or die. What funding options are often helpful for concerned families?
The family home
The equity accumulated in the family home may be the single greatest source of personal wealth for a parent or grandparent. The home itself is also a source of stability and comfort for the family member with special needs in many cases. Transferring ownership of the home to a trust helps ensure that a dependent family member can continue living at the property even after their caregivers die.
Life insurance proceeds
A life insurance policy can provide lump-sum financial support when people lose immediate family members. Typically, people name individuals as their beneficiaries when they have a life insurance policy.
However, family members funding a special needs trust can name the trust as the policy beneficiary. Doing so helps ensure that a family member with special needs has access to ongoing financial support without necessarily eliminating their eligibility for state benefits or exposing them to the risk of financial abuse.
A variety of different resources can help fund a special needs trust. Working with a special needs planning lawyer can help families evaluate different solutions for properly funding a special needs trust.
