For all parents, estate planning has a great significance. An estate plan provides you with reassurance that your children will have their needs met after you pass. When you have children with special needs, it is even more important.
When planning ahead for children with special needs, there are at least two different trusts that you may consider. All children have different needs and some of these needs will change over time. Forbes explains the types of trusts for special needs children.
Special needs trusts
Most parents establish a special needs trust under the impression that said children will receive government benefits. This trust should supplement said benefits. The reason that you need to take special care when establishing this type of trust is because your child could become ineligible for government benefits if the trust is not drafted correctly. Government benefits provide for basic needs. Your special needs trust should provide extras for your child, such as trips and recreation.
In addition to establishing a special needs trust in advance, you can also provide permission to the trustee to convert a trust into a special needs trust after your death. This is for parents who are unsure about whether the child will receive or need public benefits.
Discretionary trusts are for parents who do not worry about whether their children will receive government benefits. If you have sufficient wealth to care for your child after you pass, then you may not have to worry about any benefits. Instead, you can focus on leaving your child enough wealth to cover expenses. This type of trust distributes income throughout your child’s life, under the supervision and discretion of a trustee. Discretionary trusts are less common of a child with special needs since a special needs trust created in this context has very little downside.