Here is an article from my new Special Needs newsletter.
When a family has more than one child with special needs, the last thing it wants is more complexity. At the same time, most families with multiple children with special needs are stretched financially and desperately need to preserve access to government benefits like Medicaid and Supplemental Security Income (SSI) for their children.
Although ideally each child will have his or her own trust, establishing a trust for each child may not be affordable and could make administration of assets unduly complex. Depending on a family’s situation, it may be possible to set up one special needs trust with multiple beneficiaries in order to avoid unnecessary complications in an already stressful situation.
It must be stressed that not every family can take advantage of one special needs trust when there is more than one child with special needs. For instance, if a child receives funds of his own from an inheritance or a personal injury settlement, he must have his own trust to hold the assets and he can’t share the benefits with a sibling, even if the sibling also has special needs. In other cases, for example if the children’s needs are entirely different, it makes sense to have two trusts in place.
But for many families, one special needs trust can do the trick. In these cases, the trust must be funded with money that does not belong to the beneficiaries, either while the people setting up the trust are alive or after they have passed away through life insurance and other benefits. The trustee of the trust should be familiar with all of the trust beneficiaries, and should be capable of balancing competing needs. In cases where both trust beneficiaries need assistance, the parents or other relatives setting up the trust will want to outline their thoughts about how trust funds should be allocated.
Complications with trust administration make the selection of an appropriate trustee key. In some cases, especially when both trust beneficiaries are living in the same household, distributions from the trust for the benefit of one of the beneficiaries could affect the benefits the other child receives, even if she isn’t currently receiving financial assistance from the trust. A trustee who knows the ins and outs of special needs law can avoid these situations. If a trust donor feels strongly that a family trustee is called for, that trustee should enlist the help of a qualified special needs planner to assist her with trust administration.
While not every family with more than one child with special needs can or should utilize a single special needs trust, many families can benefit from a joint trust, especially if the choice is between one trust or none at all. If you have more than one family member with special needs, ask your attorney about whether a joint special needs trust fits your family.