As a parent of a child with special needs, you may wish to continue providing for your child after your death. Having a clear estate planning goal like this can help you select the right tools for your situation.

It is especially important to use the right estate planning tools when you are planning for a child with special needs because many traditional ways of leaving a child money could cause more harm than good. This is because a lump sum of money could disqualify your child from receiving certain governmental benefits.

Why might a special needs trust be an appropriate estate planning choice?

If there is a chance your child may qualify for governmental benefits, you may not want to leave money to your child in a traditional will or trust. Instead, the safest way to leave your child money may be a special needs trust.

A special needs trust is intended to supplement whatever government benefits your child may receive. This type of trust is carefully crafted to prevent the assets in the trust from impacting your child’s eligibility for these benefits.

As long as the assets in the trust do not disqualify your child for governmental benefits, your child’s living expenses could be covered. The assets in the trust are then available to help your child live more comfortably and afford some extras. This means your money can help your child pay for entertainment, travel, pet care and other expenses that can affect your child’s quality of life.

How does a special needs trust work?

If you choose to create a special needs trust, you can transfer assets into the trust at any time during your life or upon your death. The person you choose as the trustee will then manage those assets in behalf of your child.

Because your child does not manage the assets for himself or herself, governmental agencies do not consider the assets in the trust when they evaluate your child’s eligibility for benefits. The trust also protects the assets from creditors.

All your estate planning tools should be considered carefully. However, the tool that is intended to distribute assets to a special needs child requires especially careful consideration. A special needs trust can be an effective tool when used for this purpose.