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Planning for the Future of a Child with Special Needs

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The care of your child with special needs is extremely important now, but it is equally important in the future. Deciding how to care for your child with special needs after your death or if you become incapacitated is vital. Here are 5 costly mistakes to take into consideration when deciding how to provide the best care for your child in the future.

Mistake #1: Disinheritance.

Do not rely on government supported care programs like SSI or Medicaid. Although these programs provide some benefits, they provide little more than the essentials to survive. These programs also do not guarantee that your child will be looked after once you are gone or if you become incapacitated. A more trustworthy and viable option is establishing a Special Needs Trust. A trust will provide a strong foundation for your child and guarantees that he or she is cared for.

Mistake #2: Not specializing the trust for a child.

In order to ensure that your child is eligible for all the benefits the trust allows, you must establish a Special Needs Trust. This type of trust is designed with children who have special needs in mind. The trust can be used for various medical expenses, necessary equipment to help your child, insurance, transportation and education. The trust can also be expanded to include items that help promote your child's happiness and self-esteem such as electronic devices, movies, companion payments and vacations.

Many times, Special Needs Trusts are inflexible and it is difficult to customize them for your particular child. It is important not to have an attorney make your Special Needs Trust irrevocable. In the future laws may change and so may your child's needs. The option to alter and customize your trust is very important.

Mistake #3: Choosing the wrong trustee and not inviting others to contribute to the trust.

During your lifetime you are able to manage your child's Special Needs Trust, but it is important to elect another to serve as the trustee once you are no longer able to manage the trust. Keep in mind that you should select someone who understands finances and cares about your child as much as you do. In some cases, it is best to choose a team of advisors to manage your trust.

It is also important to invite friends and family to make a gift to the trust or keep the trust in mind when they are planning their own future. While the support from family and friends helps continue care for your child, you should also consider leaving your own assets to the trust or making the trust the beneficiary of your life insurance plan.

Mistake #4: Having your other children help support your child with special needs.

Relying on your other children to help support your child with special needs is not a long-term solution. While other children may help with expenses for short-term needs, it is not a wise solution for the future. Although siblings may desire to help, they have their own lives and financial responsibilities to attend to. By providing a Special Needs Trust, all of your children are protected and will be cared for. The trust will also provide instructions and guidance for your other children and limits their financial burden.

Mistake # 5: Inconsistent funding and maintenance of the Special Needs Trust.

Ownership and beneficiary designation must be changed for estate plans that utilize trusts. Your attorney will direct you as to what assets should be put where. If you suspect that your assets were not properly transferred or you are not sure of your next step, contact your attorney and request a report. You should feel comfortable with how your assets are being handled and that your funds are being maintained properly.

Taking measures to avoid these mistakes will help protect your child’s financial future.

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