Do you really need a special needs trust for your child?

You may already know that your special needs child cannot have assets over a certain amount in order to receive benefits from the government. This limitation may make it seem difficult to plan for your child's future. Fortunately, an estate-planning tool that could work for you and your child does exist.

A special needs trust allows you, other family members and friends to set aside assets for your child's benefit. You may think that any type of trust would work, but this type of trust has particular language in it and some limitations that protect it from inclusion in your child's assets by the government. While you are alive, you can continue to add assets into the trust, and make distributions to your child. After your death, assets from your estate can go into the trust as well.

Types of things the trust can provide for your child

An attorney can better advise you regarding the types of things that a special needs trust can provide for your child under North Carolina law, but in general, it can pay for the following:

  • Computer equipment
  • Transportation
  • Rehabilitation
  • Home health aids
  • Education

The trust could also pay for dental care and medical needs that government benefits and programs do not cover.

Types of things the trust can't provide for your child

Remember those limitations mentioned above? The trust may not fund the following expenses:

  • Utilities
  • Food
  • Home insurance
  • Housing costs
  • Property taxes
  • Cash transfers

Again, this list only provides a general idea. An attorney could provide specifics.

How to begin

You will need to choose a trustee. It would help if the person is good with money, but the more important thing is that you trust him or her with your child's future. In addition, the person you would like to choose needs to be willing to serve in this capacity. It is quite an honor and responsibility to serve as a trustee, and the person you want to fill this role needs to understand what the job entails before agreeing to serve.

If you decide to use a special needs trust, it would be a good idea to find an attorney in your area who sets up these trusts for families like yours on a fairly routine basis. Creating this trust properly is imperative, since it must comply with certain conditions, rules and laws in order to remain valid and not interfere with your child's receipt of government benefits, yet provide for his or her needs.

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