Parents and caregivers of special needs children in Minnesota understand the importance of planning ahead to ensure the future care of their loved one.
For most families, this includes working with a special needs lawyer to create trusts and other legal documents which provide for the continuing care of the child when their parent is no longer able to do so because of age, death or incapacity.
Knowing where the funding will come from for a special needs trust can add an extra layer of concern. Medical concerns and housing options are certainly just the tip of the iceberg when it comes to planning for the rest of your child’s life. Chances are, you have been dealing with these expenses all along and are concerned that there will be nothing left to provide for your loved one.
That’s why it makes sense to consider the available options when determining how to fund, or put enough resources, into a special needs trust.
How Can I Fund a Special Needs Trust?
Of course, if you have a valuable estate to leave behind, much of this can be used to fund the trust. Whether you dictate that real estate be sold upon your death to benefit your child or you have created some sort of savings program which will meet his or her needs, you are certainly on the right track. Your Minnesota special needs lawyer will help you direct these funds to the correct place.
For what is probably the majority of the population, however, leaving such a sizeable estate behind to care for a special needs child is just not in the cards. So, what do you do in a situation like this? One common answer is to purchase a life insurance policy which pays out directly to the special needs trust. Perhaps surprisingly, there are policies which are set up to pay off only when the second parent passes away; and these can be quite inexpensive. They are often referred to as “second-to-die” policies.
Another option for funding the trust is to ask others to contribute. Tax incentives allow for considerable breaks on money which is given in the form of gifts annually. For those looking for such an incentive, the special needs trust can be a worthwhile recipient for an annual contribution. In these cases, it is recommended that you set up the special needs trust as an irrevocable trust. In order to make it easy for others to contribute, the trust should be created during your lifetime rather than upon your death.
How Much Money Should Be In the Special Needs Trust?
Determining the proper amount to fund a special needs trust here in Minnesota is something you will likely want an experienced lawyer to help with. Living expenses can vary across the country and depending on the lifestyle you wish for your child to enjoy in your absence, working with a local attorney who understands the costs your child may face is often best.
There are some resources available for free, however, that can offer some guidance, including the MetDesk Special Needs Calculator at http://www.metlifeiseasier.com/metdesk/. However, there are a lot of considerations to keep in mind when it comes to trying to anticipate the future needs of your child. Because there is no real way to predict how costs will change, it is a good idea to re-evaluate your numbers from time to time.
A few of the categories you’ll need to consider include:
• Medical care
• Care assistance
• Replacement for assets
• Special equipment
A Minnesota lawyer with experience funding special needs trusts will have a comprehensive list of considerations and will work with you to determine appropriate numbers.
If you have questions or you’re ready to get started setting up a special needs trust for your child, give our Monticello trusts and estates law firm a call at (763) 244-2949 and ask to schedule a Personal Strategy Session.