People with serious health issues or developmental differences may require support in ways that others do not. Whether someone has a congenital condition or acquired health concerns because of illness or an injury, they may require practical support from family members or professionals to manage their daily lives.
They may also require more extensive medical support and different educational services than the average person. If you have a family member with special needs, you may worry about how they will pay their bills when they become adults or what kind of support they will have after you die.
A special needs trust is a useful tool for those who want to provide for a loved one with special needs, but a trust is only as useful as the resources used to fund it. How do you fund a trust to provide for your family member’s future well-being?
With assets you have now
One of the reasons that people think they cannot create a special needs trust yet is that they believe they need hundreds of thousands of dollars when they draft the documents to fund the trust. Special needs trusts should have significant resources to make them noteworthy and generate a lasting impact on someone’s life, but you don’t need to transfer all of those resources now to create the basic framework.
Additionally, there is no minimum amount of funding. You could use one bank account or investment account as the nest egg for your special needs trust. You could also make ongoing contributions to it just like you do your retirement savings. You might even consider transferring your home to the trust so that your loved one won’t ever have to relocate regardless of what happens to you.
With property you want to transfer later
You can arrange for future property transfers. You can potentially fund the trust with assets you don’t even have yet. For example, the trust could be the primary beneficiary of your six-figure life insurance policy. If anything happens to you, those funds go to the trust and can then provide structured support for your loved one.
Perhaps you would like to transfer the house to a trust but do not wish to do so yet. You can arrange for such transfer at the time of your death or incapacitation in the future. You can use a broad range of different assets in essentially any amount to start funding a special needs trust. Putting the right rules in place for accessing those resources and planning to increase the value of the trust over time can help you provide adequate support regardless of what happens to you in the future.
Understanding how to fund a special needs trust can help you see the value of this tool for your family’s unique needs.