How To Take Care of a Mentally Disabled Child Through a Trust
A special needs trust is formed with the intent of providing for a mentally disabled child after you die. Without a trust, the property given to the child in your will would be controlled by a guardian who has the discretion to use the property as necessary for the care of the child. A special needs trust, on the other hand, is controlled by a trustee who releases property for specific situations that are enumerated in the trust document, allowing greater access generally to the property for the disabled child. In addition, special needs trusts tend to last longer than simply bequeathing property to a guardian, as assets are invested and the interest is used to support the mentally disabled child. There are different types of special needs trusts that you can establish depending on the amount of care necessary for the disabled child.
If your mentally disabled child is able to complete simple daily tasks, an allowance trust may be the best means of caring for the child. An allowance trust is designed to provide for your child’s daily needs. For instance, you can instruct the trustee to give the disabled child weekly money to buy groceries or eat at a cafeteria. If your child is employed, the trust can provide for transportation, money, work clothing, etc.
In addition, you can add a discretionary clause to the trust giving the trustee the ability to release funds for unexpected expenses. For instance, if your disabled child needs their tonsils removed, the trustee can pull the funds for the surgery from the trust.
The advantages of an allowance trust is that it ensures the mentally disabled child some freedom while still providing him or her the stability necessary for a happy and successful life. It also ensures that a disinterested party is releasing only the necessary funds to the child. That means that overall, the funds will last much longer.
Care Only Trust
If your mentally disabled child is unable to function on their own and requires constant care in an assisted living home, a care only trust may be best. A care only trust requires that funds only be released to meet the mentally disabled child’s care needs. For instance, the trust funds would cover the assisted living home’s care costs, medical fees, and anything else that the mentally disabled child requires. Another term for this trust is a basic needs trust.
After Care Trust
The final type of trust is for those parents who have already spent considerable amounts of money caring for the mentally disabled child. An after care trust specifies that funds are only permitted to be released from the trust to cover basic needs that disability does not cover. This trust is especially useful if there is any debt associated with the care of the mentally disabled child, as the funds of the trust are protected from confiscation by debt collectors. This trust does limit funds to only care-related payments, meaning there would be no other funds available for discretionary spending by or for the mentally disabled child. Still, your child's basic care needs would all be met.
See an Attorney
If you are concerned about providing for a mentally disabled child when you die, contact an estate planning attorney about setting up a special needs trust. Every mentally disabled child is different, so every trust requires different drafting and provisions that are best handled by an experienced attorney.