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2 tools for ensuring financials for a disabled adult child

There's a notable quote that goes, "No parent should have to bury a child." As the original source of that phrase also said, it's unnatural. The notion makes sense. The normal cycle of life calls for those of the older generations to pass before those in the younger, and most of the time that's how things work.

But even following the normal course of events can cause anxiety for parents who care deeply about caring for their children. And that concern only runs deeper when one of those children has some form of chronic disability. The extensive care that child may require is typically borne by the parents. How will that care be delivered if the child outlives the parents? Can strategic estate planning meet care needs without causing friction in the rest of the family?

The answer is that it depends on your unique circumstances. To get answers, you should consult an attorney to explore your options. But there are two specific tools to know about in this regard.

The first is a special needs trust. This document is how a parent or other guardian of a special needs individual dedicates a set sum of money to cover the needs of the trust recipient. Disabled individuals often can't manage their own money easily or wisely. And so, in addition to providing a pool of funds, this type of trust calls for the naming of a third party to administer the funds. When well-crafted and executed, the trust can also provide the funds without threatening the recipient's eligibility for benefits that might be available from the government.

Trust fund sourcing can be a point of resentment among heirs, especially if it draws from what they might inherit. This is where the second instrument, a last-to-die insurance policy, comes in. The policy only pays benefits upon the death of both parents and the funds can be assigned directly to the trust.

How much the policy should be for depends on what you can afford. In some cases, you might be able to use government benefit funds to help pay the premium.

Again, the structural details are something to discuss with your attorney.

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