Parents and other family members establishing special needs trusts typically have one of two priorities. They want to ensure that a child with special needs has financial support after their parents or current caregivers become incapable of supporting them. Other times, the goal is to provide resources that make semi-independent living possible.
In either scenario, the trust likely requires significant funding to ensure that it has the resources necessary to provide practical support for the beneficiary with special needs. Arranging for adequate funding is of the utmost importance for those trying to protect their children with special needs.
What funding options are common?
Sometimes, the people establishing a special needs trust already have valuable resources that they can use to fund the trust. Financial resources can be effective funding options for those who can spare savings and income.
In cases where trustors do not have immediate access to enough capital to fund the trust, they may choose to instead name the trust as the beneficiary of their life insurance policy. That way, the trust receives a large amount of money after their passing, and the trustee can manage the funds for the beneficiary.
Arranging to transfer the primary residence of the special needs individual to the trust, either immediately or after the passing of other occupants, is a common practice. Such arrangements allowed the beneficiary with special needs to remain in a familiar space and maintain their connections to their social support network.
Ensuring that a special needs trust has adequate funding can be as important as properly structuring the trust and choosing an appropriate trustee. Those intending to establish a special needs trust may need help ensuring that the trust can provide the support that a vulnerable family member requires.
