Parents of special needs children in Iowa and throughout the United States may want to create trusts to hold their assets. Keeping a child’s assets in a trust may make it easier to participate in government programs such as Medicaid. In most cases, those who have more than $2,000 will not be eligible for benefits or could lose the benefits that they already receive. Furthermore, putting money from a settlement or insurance payout into a trust means that the beneficiary won’t have to manage his or her own finances.
Instead, an individual’s finances will be managed by the trustee as well as an advocate. The advocate is typically a close friend or family member of the beneficiary who understands the needs of both the grantor and the beneficiary. The person who creates the trust can provide instructions within the trust as to how decisions such as disbursing funds should be made.
Choosing the right trustee is important as it will typically determine when and how cash can be disbursed to a beneficiary. The trustee is also required to make regular reports to government agencies and stay on top of any regulatory changes that may occur. An attorney or financial adviser may help parents determine how to choose a trustee as well as determine which type of trust best meets their child’s needs.
Parents of children who have special needs will need to account for their care when creating an estate plan. Creating a trust as part of the estate planning process may ensure that funds are available to provide for a disabled child’s care after a parent dies.