Because special needs individuals often receive governmental benefits due to their inability to earn money or make enough money to pay for their needs, they must have a trust set up to hold any money for them that is over $2,000. Money in excess of this will stop the influx of government benefits and make it difficult for the individual to receive adequate physical and medical care.
Special needs trusts come in several distinct varieties. First-party trusts are sometimes chosen by adults who want to fund an account before the onset of a disability. These people ensure that they have enough money set aside so that they can still receive Medicaid and other assets. However, third-party trusts are most commonly seen in special needs care. These trusts are typically funded by parents or other family members to provide for the child for the rest of his or her life.
Estate planning and special needs trusts require a great deal of confusing paperwork. Getting proper legal and financial help is imperative to ensuring that the trust is set up correctly. Additionally, a professional will be aware of any changes to regulations that may affect the trust.
Every special needs trust will need someone who is set up over the trust to distribute the funds. The trustee must often pay bills, invest money and purchase necessary items for the special needs individual. The trustee is usually a family member, such as a parent or an older sibling, although it may occasionally be a disinterested third party.
It can be difficult for parents and other third parties to know how much money should go into the trust. Many parents simply put in as much as they can while still ensuring that they have enough money to live on themselves. However, one can get a good idea of how much will be needed by looking at current medical bills, rent, food and clothing charges and other common costs.