If you have a special needs child, it is natural to worry about what the future of your child will be like. Establishing a special needs trust may help provide a good life for your child when you are no longer around to provide love and support. The question you might grapple with is how much to place into the trust.
Exact amounts will vary from family to family, so only you and your loved ones have a good idea of how about how much your child will need. Kiplinger describes what to consider if you are not sure how to arrive at an amount.
The needs of your child
As you probably understand from experience with your child, individuals with special needs generate a lot of costs, like medical expenses, shelter and amenities. Think about what your child will need and how your child will live. You may need to fund a particular kind of housing like a condo or a group home situation. Also consider a budget for activities like eating out, or for material items like electronics and clothing.
The life of your child after your death
Keep in mind that you are devising a budget for the life of your child after you die. After your death, you will no longer be around to provide things like care coordination and advocacy for your child. You will likely have to budget those activities as costs that your special needs trust should cover.
The administration costs of the trust
Also remember that it costs money to oversee a trust. Once you have funded the trust, the government requires a tax return from the trust each year, and if the trust expenses are high enough, the government will impose taxes. Preparing returns and paying taxes are tasks that will fall on your trustee, so consider budgeting money in the trust for legal and trust administration costs.
Kevin Tharpe
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