Determining how much money to have in a special needs trust has been one of the most challenging tasks faced by parents who have children with special needs. In essence, they need to answer the question, “How much will it cost to provide for my child years after I die?” It is not easy
A few factors come into play. For example, the life expectancy of your child is one. Another may be whether your child needs a high level of care. And another relates to how much money your child may receive in public benefits.
Housing, medical expenses, training
You must understand that it will take a great amount of money to fund a special needs trust. Why? Because it may have to last for decades, perhaps up to 40 years. Since you likely cannot solely provide seed money for the trust, you likely need assistance. It is a good idea to turn to a network of generous, empathetic and understanding family members and friends to help you fund it.
At a minimum, the special needs trust would need $100,000, but that amount likely is way too low. You may need up to $1 million.
Among the biggest expenses is housing. Living in a private group home may require the purchase of a condominium unit, which may cost as much as $300,000. Then there are costs related to food, utilities and staffing. Other costs to consider include medical expenses, equipment such as a specialized van and wheelchair, education costs, electronics and computers, therapy, training along with guardianship-related costs.
Factor in public benefits, too
A key thing to remember: If you have the trust, your child will continue to receive certain public benefits such as food stamps through the Supplemental Nutrition Assistance Program (SNAP), Medicaid and Supplemental Security Income (SSI). (This would not the case if your child had inherited the money in a will. He or she no longer would be eligible for such benefits.)
Also, understand that a trustee of your choosing will manage the assets within the special needs trust. The trustee will make distributions to your child and that money supplements his or her lifestyle beyond the amount he or she receives through public benefits.
It will take planning, patience and a significant amount of money to fund a special needs trust. As the parent of a child with special needs, you have confronted and overcome many challenges. A special needs trust is another challenge that you are ready to face.