How to Draw Up a Special Needs Trust for a Child With Disabilities

Who will be the trustee? Because the rules of managing a trust are so complex, most lawyers advise contracting with an expert. Fees average 1 to 1.5 percent, Williams says.

 

Will a family member act as co-trustee or guardian? This option lets a family member approve the trust accounting and make the requests for a person with disabilities who can't do it himself.

Where will the child live? Money from a special needs trust can't be used for housing or food if the person with disabilities received government benefits. If the $733 a month in SSI payments won't cover housing, and the person can't work, it's important to explore other options.

Are other documents needed? In the eyes of the law, a person 18 and older is considered an adult. If a parent or other relative needs to make decisions, documents providing for guardianship, health care surrogate, power of attorney or other functions may be required.

Is a new ABLE account a better choice? Legislation signed in late 2014 established accounts similar to 529 college savings plans for people with certain disabilities diagnosed before age 26. The federal government and state governments are still establishing the extra rules, though the accounts should be available in many states by the end of the year. In general, family members can contribute up to $14,000 a year to the accounts tax-free, and recipients could keep their government benefits until the accounts exceed $100,000. After that, they would lose SSI but remain eligible for Medicaid. These accounts would be less restrictive than a special needs trust, though experts say some people with disabilities may need both options.

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