Parents may know that a trust can provide long-term financial support for their special needs child. However, they may worry about how they will fund this trust and how the trust will affect their child’s federal benefits.
Some parents may worry that their child will lose eligibility for federal benefits if he or she has access to a trust. According to Forbes, individuals with disabilities can only have $2,000 in their bank accounts if they receive federal benefits. One of the benefits of a trust is that federal departments do not consider it when they determine if a person is eligible for these benefits. This means that a special needs child can receive financial support from both the trust and federal benefits.
How to fund a special needs trust
Parents may wonder how they will find the money to put into a trust. According to CNBC, parents can fund a special needs trust through their life insurance policies. This option may make sense for many families, as a special needs child may not need to access the trust funds until after the death of both parents. Sometimes family members may give monetary gifts to children. Parents can ask them to put this money into the trust.
How much money to put in trust
Special needs children may need care for their entire lives, so it is important to make sure the trust is well-funded. Some financial professionals recommend that parents put at least $100,000 into the trust. However, it is a good idea for parents to consider their unique situation. What kind of care will a child need as an adult and how much will that care cost? Parents may want to run the numbers so they know how much it will cost to support their child for a year.
Funding a special needs trust may seem overwhelming but it is an important step if parents want to support their child well into the future.