A special needs trust can serve two important purposes. They can allow for more independence of a child with special needs once they technically become an adult. They can also help ensure that a family member with special needs has economic resources even when their parents or primary caregivers die.
Proper funding for a special needs trust is important for the trust to serve its intended purpose. How can concerned parents or other family members fund a trust for a vulnerable person?
Creative options are available
Many people assume that funding a trust requires tens of thousands of dollars in liquid capital. While it is true that trusts can manage financial resources and provide controlled access to that capital, people don’t need to be particularly wealthy to fund special needs trusts.
They can use their existing resources in many cases, even if they don’t have enough disposable income to save thousands of dollars for funding. Frequently, parents arrange for the home where their child lives to transfer to the trust. Doing so can allow the child to continue living in the same environment even if they lose their parents.
Concerned parties can also arrange for life insurance proceeds to pay to a trust. Filing paperwork that designates the trust as the beneficiary for the policy can provide a large amount of funding all at once after a family member passes. There may be other options available as well, depending on personal holdings and the needs of the individual with special needs.
Families often need to employ relatively creative solutions to fully fund a special needs trust and support a family member who cannot live independently. Reviewing personal resources and the needs of a vulnerable person can help people create, structure and fund a special needs trust for that individual’s protection.