Estate planning, no one in New York or elsewhere really wants to do it but failing to do it can leave loved ones in a bad position after you die. If you have a special needs child, it is necessary to plan for how you are going to take care of them even after you are gone. If you do not go about it the right way, your child could lose his or her much-needed government benefits -- benefits he or she counts on, or will count on, to survive as an adult.
A special needs trust will allow your child to inherit your estate without it affecting his or her ability to access Medicaid and Security Supplemental Income. How does one go about setting up a special needs trust? How much do I really need to put in it? Who should manage the trust?
Setting up a special needs trust
There are two different types of special needs trust available: first party and third party. The most commonly used trust for special needs children is the third-party trust. Setting up this type of trust can be complex and time-consuming. It is necessary to ensure the wording is just so in order to protect your child's government benefits. An experienced attorney can draft the documents so that the trust offers the protections you are seeking for your child.
How much should I put in the trust? This is entirely up to you. It is recommended that the trust be funded with a minimum of $100,000 in order to cover any setup or maintenance costs. Failing to fund the trust will leave your child unprotected and could cost him or her dearly in the long run.
Choosing a trustee
Choosing a trustee to manage a special needs trust can be a challenging task. You want it to be someone you can trust. You want it to be someone who understands that how money is dispersed to your child matters and can affect his or her government benefits. You want it to be someone who is ready and capable of handling the stress that comes with being a trustee. The trustee can be:
- A family friend
- A family member
- A licensed firm
No matter whom you choose, you have to feel comfortable in your decision.
Keep the trust up to date
The rules regarding Medicaid and Social Security benefits are always changing. If you choose to create a special needs trust for your child, it is necessary to adjust the terms of the trust when the rules change. This is not something that you can create and let alone. Legal counsel can keep you abreast of law changes and help you keep your trust documents updated.