A trust is an essential legal document that can help protect your child’s interests if they become incapacitated. If you have a special needs child, it is especially important to establish a trust to ensure their future care and well-being. In this guide, we will walk you through the process of setting up a trust for a special needs child. We’ll discuss why trust is necessary, what should be included in the agreement, and how to fund the trust.
1. Have an Initial Consultation With an Attorney
You should consult an attorney before setting up any legal document, which is especially important when setting up a trust. Your attorney can help you understand the implications of setting up a trust and ensure that it is the best option for your child’s needs. During your consultation, you will also want to discuss what should be included in the trust agreement. This document outlines how the trust will be managed and how the assets will be used. It is essential to be very specific in this agreement, so there is no confusion later. Your attorney can also help you decide how to fund the trust. There are a few options, but the best option depends on your child’s needs and financial situation.
2. Draft the Trust Agreement
Once you have consulted with an attorney and decided to set up a trust, the next step is to draft the trust agreement. This document will outline how the trust will be managed and what assets will be included in it. You’ll need to decide who will manage the trust, how often distributions will be made, and how the assets will be used. It is essential to be as specific as possible in the trust agreement, so there is no confusion later. You should consult your attorney to ensure the agreement is properly drafted and meets all legal requirements.
3. Fund the Trust
When you set up a trust, you’ll need to decide how it will be funded. There are a few options, but the best option depends on your child’s needs and financial situation. You can fund the trust with cash, investments, or property. You can also set up a life insurance policy to fund the trust. Whatever option you choose, ensuring enough assets in the trust to cover your child’s future needs is essential. A study recently found that the average cost of raising a child with special needs is $21,000 per year. This number will vary depending on the severity of your child’s condition and their individual needs, but ensuring that the trust is adequately funded is essential.
4. Review the Trust Agreement Regularly
Once you’ve set up the trust and funded it, you’ll need to review the agreement regularly. This is especially important if there are any changes in your child’s condition or needs. You may need to change the trust agreement as your child grows older and their needs change. You should also review the agreement if any changes in the law could impact the trust. For example, if a new tax law is passed that affects trusts, you’ll need to ensure that the agreement is still valid and meets all legal requirements.
5. Estate Planning
If you have a special needs child, planning for their future care and well-being is essential. A trust can be a helpful tool in estate planning for a special needs child. It is important to consult with an attorney to ensure that the trust is properly set up and funded. Estate planning for a special needs child can be complex, but it is important to take the time to plan for your child’s future. This will ensure that they are taken care of if something happens to you.
By following these steps, you can ensure that your special needs child is cared for in the future. A trust can be a helpful tool in estate planning, but it is essential to consult with an attorney and ensure that the agreement is properly drafted and funded. Reviews of the agreement should be done regularly to ensure that it meets your child’s needs.