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Helping You Navigate Complex Legal Issues

Planning ahead for special needs children

Gregory A. Lang

Minnesota residents with special needs children may wonder what they can do to care for their children in the future.Planning ahead may provide parents with reassurance that their child will have what they will need when they are gone.

Approximately 56 million Americans are disabled, census statistics show. While a 2011 survey indicates that roughly 80 percent of parents are unaware of pertinent options, 38 percent do have a will and more than a third have designated where the dependent would live. These figures have grown since 2005 as more parents are using solid planning for the future to protect their children when they cannot. One way to do that is implementation of a special needs trust. An advantage of this mechanism is that the trust may be structured so Medicaid or Supplemental Security Income is not interrupted.

The two types of special needs trusts are third-party trusts and self-settled trusts. Self-settled trusts are set up by the disabled beneficiary, and any government benefits received throughout the beneficiary's lifetime are paid back out of what is in the trust when the individual dies. This is not the case with a third-party trust. Obtaining information from an attorney or financial consultant may help parents make the choice that is right in their case.

Assigning trustees is usually done by picking a family member or a corporate trustee. The relationship the family member has with the beneficiary is an important point of interest and one that requires deliberation. Consulting with an attorney who has experience in estate planning matters can be helpful when considering a special needs trust.

Source: USA Today, "Protecting special needs kids financially", Cherice Chen, August 23, 2014

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