It can be expensive to support a child with special needs. You may have medications and devices such as wheelchairs to provide, physical therapists to hire, transportation and housing to arrange. Government programs like Social Security and Medicaid can help. But those benefits are regulated and subject to reimbursement as your child grows older.

Fortunately, there are ways to organize your estate that can help you protect your child’s interests and improve their quality of life. With the right planning, you might secure key government aid, as well as a supplemental income. You can find peace of mind knowing that your child is secure and comfortable.

What is a special needs trust?

A special needs trust is a tool with which you can supplement your child’s public aid, not replace it. This is an important distinction. Any inheritance or personal injury settlement could potentially disqualify your child from the programs they have come to depend on. A trust can protect those assets for longer-term financial security.

There are three types of special needs trusts:

  • First-party: This trust manages the assets of someone who has been awarded an injury settlement or inheritance. It’s usually set up by the individual, parents, grandparents or guardians. Only the beneficiary can collect. When they die, leftover funds are earmarked to pay back government programs.
  • Third-party: The most common type of special needs trust, a third-party trust allows parents or others to pass their assets without disrupting aid programs. Parents of special needs children often include third-party trusts in their estate plans.
  • Pooled assets: Trusts built around pooled assets allow families with limited family assets to invest in nonprofit organizations that manage funds pooled from many recipients. Their beneficiaries typically receive a share of funds based on the family’s contribution.

It’s possible that your child—or another family member—might be disabled now but may not be disabled permanently. Special-needs trusts can be set up to stop collecting if the funds are not needed.

Empower your child

Every trust needs a trustee to oversee the management of inheritance benefits. If possible, you may want to work with your child to name a trusted guardian who will support your loved one’s important decisions. Spell out your collective wishes in writing.

Your job as a caregiver is challenging, relentless and rewarding. With the right support, your child can thrive and enjoy a healthy life even after you’re no longer able to help. An attorney experienced with special needs trusts can help you safeguard your child’s future.