What Funds Can I Put Into A Special Needs Trust For My Child?
There are multiple ways of funding a special needs trust. “Fund” means putting money into the name of a special needs trust for the benefit of your disabled child. You can create a trust during your lifetime, effective immediately, and place money into this trust so as not to disrupt your child’s public needs-based benefits. It is a matter of timing about when you want the disabled beneficiary to receive the benefit of this money. If you have a child who is under 18 with a disability, you may hear from your parents or siblings or grandparents that they would like to leave money for the benefit of your child. In that case, you may want to create a trust during your lifetime for the benefit of this child, which you can do for all your other family members to name the child as a beneficiary under their estate planning documents.
Another way to fund trust is through life insurance. Life insurance policies can be used to leverage money that you may have set aside for savings, so that if you die, you get that much more money into your child’s trust. This is a very common asset to purchase alongside creating a special needs trust. It is especially important if your child is under the age of 18 and requires a lot of care. Most people will not immediately give a particular asset during their lifetime to their special needs child because they’re just going to use their own funds to provide their child with whatever they need. It is good to consider creating this third-party special needs trust for any family members who want to give your child an inheritance later down the line.
Who Will Manage My Child’s Special Needs Trust?
Determining the person who will manage your child’s special needs trust is a difficult and complex decision. The title of the person who is managing your child’s special needs trust is called a trustee. Be aware that there are corporate trustees out there to handle these types of trusts. Most big banks and financial institutions will have a trust department that can handle trusts. However, bigger entities will require a higher amount of assets in order to manage that special needs trust. You can always have a family member named as trustee to manage your disabled child’s special needs trust.
If you name a family member to manage the trust, take special care about who the remainder beneficiary is after your disabled child dies. If you name your trustee the same as the remainder beneficiary, the trustee may decide not to make as many distributions to your disabled child because it would diminish the share the trustee would receive after the disabled child’s death.
Couldn’t We Ask Other Children To Use The Money For Our Special Needs Child’s Benefit?
Most people will read information about special needs trusts and think that it’s a whole lot of work and cost, and maybe even a way for attorneys to make additional legal fees. They may decide to simply leave money to their son to manage for his disabled brother. The problem with leaving money to one child outright and disinheriting the disabled child is that the child you leave the money to will have zero obligation to actually take care of his disabled sibling. The beneficiary gets the money, no strings attached.
If the child that you leave all the money to dies prior to the disabled sibling, then whatever their estate planning documents say would control. The person you name may honor your wishes or they may not honor your wishes. It is important to be very careful and thoughtful when planning for a disabled child.
For more information on Funding A Special Needs Trust In Florida, an initial consultation is your next best step. Get the information and legal answers you’re seeking by calling (904) 398-6100 today.
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