When you have a child with special needs, you have to think about what will happen in the future if you die. If your child needs extensive care and support, you must ensure it is in place in case something does happen to you.
Many parents do this by creating a special needs trust. One option is a pooled trust.
Defining a pooled trust
A pooled trust is one held by a nonprofit organization that creates and manages the assets. Your child’s assets would go into a sub-trust within the larger pooled trust.
Using a pooled trust
With a pooled trust, you will not have to do anything once you decide to be a part of it. The organization should handle all the details of creation and management. You will just need to sign the paperwork and provide information. You also can direct the organization about your child’s needs to ensure the correct use of trust funds after your death.
Choosing a pooled trust
A pooled trust may not be the right choice in every situation. It is typically the best if you have limited assets. Putting together a special needs trust may not be cost-efficient for you, and a pooled trust can allow you to save money, which you can use to care for your child.
Regardless of which type of trust you use, it can be the best way to protect your child and ensure he or she has the assets needed for his or her care. The ins and outs of meeting requirements and following regulations for Medicaid or Social Security can make it tough to leave your child any assets if you do not use a trust.
