The estate planning process is something that can be easy to put off indefinitely. Still, if you want to have some control over what happens to your assets, you probably want to get started as soon as possible.
In addition to writing a will, you may want to set up a special needs trust. This type of trust holds funds for someone’s benefit without actually transferring ownership of your wealth to him or her. Here are three types of children who may benefit from a special needs trust.
1. A child who has a disability
If you have a child who has a disability that prevents him or her from working as an adult, forming a special needs trust may make a great deal of sense. After all, with a special needs trust, your son or daughter likely remains eligible for means-tested government benefits, like Medicaid or Supplemental Security Income.
2. A child who is bad with money
Even if you want to leave a cash gift to your child, you may worry about his or her ability to manage money diligently. If your son or daughter burns through money quickly, forming a special needs trust may permit you to place restrictions on when and how your child can access disbursements.
3. A child who needs temporary help
While your child may have special needs currently, he or she may not need your financial help forever. A special needs trust does not have to be permanent. In fact, if you choose, your child may only use the trust until he or she reaches certain milestones.
Regardless of your goals and your child’s needs, forming a special needs trust may help your son or daughter manage financially after your death. Ultimately, there may be few better ways both to cement your legacy and to support your child.