Managing finances and planning for the long-term well-being of a child with special needs via Trusts -

Managing finances and planning for the long-term well-being of a child with special needs via Trusts

Create a Private Trust or a Special Needs Trust: Establish a Private Trust in your child’s name. This trust can hold assets and provide for your child’s needs and recommend you work with an attorney who specializes in Trusts to set it up correctly. Creating a private trust for a special needs child can be a great way for parents to ensure that their child is taken care of and that their legacy is managed properly. By having a trustee manage the trust, the parents can be assured that the assets will never be owned by the trustee and that their wishes will be upheld in a fiduciary manner. This can help to address any concerns that the parents may have in regards to their child’s future should they become unable to care for them.

Funds required for Lifetime care: When setting up a trust for a special needs dependent, a major factor to consider is the amount of funds the trust will require. This must be an adequate amount to cover the necessary expenses and any other costs associated with the trust. It is also important to take into account the lifetime care cost of the dependent. This financial planning exercise involves numerous factors, such as life expectancy, inflation, returns and more. Additionally, the trust may incur additional costs, such as account management, investment management and professional fees. These funds must be sourced from the corpus allocated for the dependent, meaning the amount of money required will be higher than just the dependent’s expenses. Thus, it is important to decide who will fund these costs and where the money can be sourced. As per www.autismspeaks.org, you can fund the trust with the following:

Assets you already own (you may choose to leverage with life insurance).
Life insurance can be the most cost effective way to leverage your assets. Your death benefit will be income and estate tax free directing the entire sum to the trust.
Your estate. Revise your will to include the Special Needs Trust as a beneficiary instead of gifting direct to that child,

Trust Deed and Register the Trust Deed with your local Registrars office: A trust deed is a legal document that is essential in setting up a private trust. Drafting the trust deed is of utmost importance, as it serves as the foundation for the trust’s operations. All conditions and regulations, including those governing the trustees’ powers and authority, managing the funds, do’s and don’ts, dividing income to the beneficiary, and the process of dissolving the trust, must be included in the trust deed.

Appointing Trustees: Parents of an individual with unique needs may not desire to have any family members serve as Trustees – the goal being that a Trustee should not act upon his duties under any influence or unwanted bias. Hence, a Corporate Trustee can be appointed to meticulously follow the guidelines laid out in the Trust Deed. Infact Forbes India suggests that a family facing the challenge of caring for a special needs family member should consider appointing a neutral third party, such as a family friend, individual, or corporate entity, as the Protector of the Trust.. By doing so, it ensures that any potential unresolved negative emotions do not influence the trustee’s duties. A Corporate or professional Trustee is an ideal choice, as they can adhere strictly to the instructions detailed in the trust deed.

Professional Guidance: Consult with professional trust planners and attorneys who specialize in special needs planning. They can help you navigate the complex financial and legal aspects of providing for your child’s future.