Special Needs Planning: What is a Special Needs Trust?
What is a Special Needs Trust?
As the parent of a child with special needs, it has been our experience that you will do whatever is necessary to care for your child. As unnerving as it may be to think, what happens when you are no longer able to provide for your child? At your death, how do you continue to provide the same level of care that will allow your son or daughter to continue to live as fulfilling of a life as possible?
The Special Needs Trust (SNT) is arguably the most important planning tool available to families with children with special needs. Although many of the families we serve each year come into our office having heard of special needs trusts, they are often unaware of what these trusts really accomplish, more importantly, what they protect.
Before I get into this topic, know that I am not an attorney and I am not compensated for drafting special needs trusts. Our expertise is purely driven from the interaction with hundreds of special needs families each year and from our ongoing work with attorney’s to help these families prepare their plans. You should always consult with an attorney to have your legal documents drafted and you should consult specifically with an attorney that has experience in drafting special needs trusts.
We’ll discuss what a special needs trust is specifically, but let’s briefly discuss what a trust is without the legal jargon. As simple a definition of a trust as I’ve found is: a trust is a legal device used to set aside money or property of one person for the benefit of one or more persons or organizations (as defined at http://www.mscf.org/). In other words, a trust is simply a legal document that is drafted to own and ultimately distribute assets from one entity to another. Think of it as an empty box that can hold ownership of most assets (including investments like stocks and bonds, cash, real estate, insurance or collectibles) that when properly drafted allows the grantor (person setting up the trust) to circumvent probate and have their assets distributed as they would intend.
Trusts can be used for various reasons such as to aid in tax savings, divide a family’s estate among children, carry out a charitable plan, or in this case, provide support for an individual with special needs. SNT’s can be created in various forms, but often they are implemented as a tool for parents to leave assets at their death that will be used to provide ongoing support for their child with special needs.
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