If you have a child who has a disability, you may have some deep concerns about his or her ability to work. Not being able to pursue gainful employment, of course, may lead to a lifetime of financial insecurity. Fortunately, from Medicaid to Supplemental Security Income, there are many government benefits that may be available to your child when he or she becomes an adult.
While government programs may help your son or daughter afford housing, food and basic medical care, the financial assistance they provide is often meager. With a supplemental needs trust, you set funds aside for your child to use on expenses that may improve his or her quality of life.
Qualifying for public benefits
Many public programs require applicants to have limited income and assets. If you leave money to your child in your will, you may unintentionally disqualify him or her from government help. You probably do not have that problem with a supplemental needs trust, though. After all, rather than belonging to your child, funds remain in a trust for his or her benefit.
Spending supplemental needs trust funds
It is possible to run into some trouble down the road. If your child uses disbursements from the supplemental needs trust to pay for the same things means-tested government benefits cover, your child may become ineligible for future financial help. Therefore, your child must only use disbursements for supplemental expenses.
Helping a child with a disability is one of the nobler goals of estate planning. Ultimately, if you want your son or daughter to have a good life while taking advantage of public benefits, setting up a special needs trust may be the right choice.