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Planning for your financial future can be daunting, and it may be even more overwhelming if you have a child with special needs. Family financial planning becomes more urgent when you have your child’s care and long-term financial goals to consider.
That’s why creating, maintaining, and funding a special needs trust for a child is crucial, says Dean Klassman, founder of Klassman Special Needs Planning and Keshet Buddy Baseball.
Why you need to set up a trust
Establishing a trust is the first step in preparing for your child’s financial future, and it ensures that the child can still qualify for public assistance programs like Medicaid and Supplemental Security Income (SSI). It’s important to note that a child who has $2,000 worth of assets in his or her name can become disqualified from Medicaid and SSI.
Klassman suggests that parents and grandparents who will support a special needs trust first determine that they are financially secure. Parents also need to make sure they are properly planning for other children’s futures and that their own retirement plan is continually funded.
How to fund the trust
Gifts can be made to the trust as a “gift tax exclusion,” with a donation max of $14,000 per person and $28,000 per couple, annually. Other contributions to the trust can come in the form of stocks, collections, businesses, bonds, real estate, and insurance proceeds (including second-to-die insurance).
Klassman suggests working with an insurance or investment broker to fund the trust to support the child’s entire life.
While you might be hesitant to establish a trust when your child is very young, Klassman strongly urges families to do so. With the guidance of a trusted, compassionate, and experienced professional, making a plan can be an important first step to creating the future you envision for your child.
Elizabeth Abrams is a freelance writer and communications specialist. Throughout her 15 years working in public relations she has secured media placements in The New York Times, Chicago Tribune, Chicago Sun-Times and on CNN, to name a few. In addition to operating her own agency, Elizabeth Abrams Communications LLC, she has contributed to several media outlets including Yahoo! Homes, Chicago Parent Magazine, MOMeo.com and BabbaCo.com. Elizabeth’s writing focuses on information and experiences impacting parents, children and families.
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