One of the most frightening thoughts for a person who has a child with special needs is what’s going to happen to that child, even if they’re adult-aged when the parents pass away. Trying to plan ahead for that possibility is a priority for anyone in that position.
Many people turn to special needs trusts for this situation, but that’s not necessarily the only option. Special needs trusts can provide directly for the beneficiary’s needs. Since it’s an irrevocable trust, it won’t impact government benefits that are needs-based. For some, adding a Totten trust to the estate plan may also be beneficial.
Integrating a Totten trust into the estate plan
A Totten trust is a revocable trust that applies only to a bank account. Some people know it as a payable-on-death account. To establish this trust, the account holder has to fill out a form at the bank. Once that individual passes away, the designee can obtain the contents of the account by bringing their identification and a copy of the death certificate.
For people who have a dependent with special needs, the Totten trust designation may be beneficial if the individual will have immediate financial needs on the loss of their parent. It may be necessary to designate the account to the person who will care for the individual with special needs.
Anyone who’s in this position should ensure they consider the ramifications of leaving the money from the bank account to the designee in this manner. This is especially important if the individual is receiving means-based services. Working with someone who understands the circumstances can help the creator develop an estate plan that meets the specific needs.
