Special needs trusts help provide financial support for people who may never live independently. Parents who have children with debilitating medical conditions often choose to establish special needs trusts for their safety as they mature and their protection after the parents pass.
Yet, setting aside adequate resources to fund a trust that may need to provide support for decades can be a rather intimidating prospect. How can parents fund trusts for children with special needs?
Funding solutions are typically unique
Every family has unique assets, as parents have different income levels and obligations putting pressure on their budgets. Some parents have enough wiggle room in their household budgets to set aside liquid capital to fund a trust. They earmark a certain portion of each paycheck to fund the trust.
Making arrangements for the family home to transfer into a special needs trust is a common practice. Such arrangements may allow the family member with special needs to remain in a location where they are comfortable and can preserve their connections to friends and family.
Parents sometimes arrange for life insurance to fund a special needs trust after their passing. The payout on the policy could provide years of financial support for a child with special needs.
Parents funding special needs trusts can arrange for assets to transfer to the trust later if they do not have enough available resources immediately. They may even draft pour-over wills that allow for a portion of their property to transfer to the trust as part of the probate process after their death.
The degree of support required by the family member with special needs and various other details influence the best solutions for funding special needs trusts. Creating an inventory of property and a list of support goals can help parents establish effective and well-funded trusts for their vulnerable children.