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Trusts for Kent families of special needs children

Many of our Kent readers may be parents or know parents of a child with special needs. Those who tuned in to a recent discussion about the difficult but important choice to establish guardianship for a vulnerable child transitioning into adulthood will also want to learn more about the value of a special needs trust in providing for a child's ongoing needs.

For most families, the costs of providing adequate care for a child with special needs are simply beyond their means. The cost of providing care for a child with autism, for example, has been estimated at $3.2 million over the child's lifetime. The prohibitive expense of providing a reasonable level of care for a vulnerable child means that many families must rely on public assistance programs to provide at least part of a child's care needs.

Because eligibility for supplemental resources will be important throughout the adult lives of most vulnerable children, special considerations need to factor into parents' estate planning. Estate planning professionals warn that setting up situations in which children receive assets directly from their parents can compromise program eligibility and have serious financial consequences.

Even an act as typical as making a gift to a child in a will can have unintended consequences. Instead, estate planning professionals recommend making gifts to an appropriately structured trust. A special needs trust can be funded from a variety of sources, including gifts from wills and life insurance proceeds.

Eligibility for special assistance programs often depends on both income and asset limitations. Rather than give assets directly to the child, a special needs trust allocates a certain amount to be regularly distributed in order to provide for supplement needs. The trust assets are never titled in the child's name and the distribution amounts can be structured to maintain program eligibility.

In order to serve its purpose, a special needs trust must be properly structured to conform to legal requirements. Kent residents interested in establishing a special needs trust for a child or beneficiary may benefit from experienced professional assistance.

Source: AOL DailyFinance, "Avoid the Biggest Mistake of Financial Planning for Special Needs Kids," Ross Kenneth Urken, Sept. 28, 2012

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