Wanting to ensure that their children are well cared for is a goal that most Arkansas parents have. If parents have a child with special needs, they may have specific concerns about the type of care and the amount of money the child will need in the future. Though government benefits can often help with financial aspects, parents still typically want to leave their children an inheritance, which is where special needs trusts often come into play.
Because government benefits often hinge on financial qualifications, if a person receives a significant inheritance, it could end up disqualifying that person for much-needed benefits. Fortunately, a trust can allow parents to provide for their special needs child without jeopardizing those benefits. This works by placing the intended assets into a trust, which remains separate from the child’s estate and direct ownership.
Of course, it is important that the trust is funded correctly. If not, it essentially has no use because there is nothing in it to bequeath to the intended beneficiary. Parents can fund special needs trusts by transferring personal assets into the trust, setting up a life insurance policy that will pass to the trust, placing the child’s intended inheritance into the trust, or funding it with proceeds from a lawsuit payout or settlement.
Special needs trusts can have more benefits than some people realize. They may mistakenly think that directly passing on assets to someone receiving government benefits will be helpful when, in fact, it could hurt. Arkansas residents interested in setting up this type of trust may want to discuss their options with knowledgeable attorneys.