Parents of children with special needs face the difficult decision of how best to provide for their children over a lifetime of care. Each family's case is different. There may be particular disabilities and settlements that determine the best course of action.
A child may receive a large settlement in the event the disability resulted from medical malpractice or caretaker negligence. Some settlements result from vehicle accidents or faulty playground equipment. Parents can plan to set aside funds to meet both the child's current and lifelong needs.
When a parent investigates the options of long-term care for the child, the possibilities are confusing. Every parent wants to make the best decision for his or her child. Parents need to be sure they understand the consequences of actions they take on behalf of the child. Acting alone, parents can unknowingly make decisions that permanently close off their child's access to state and federal disability programs.
Many parents may believe their best course of action is to petition the court to appoint a guardian or conservator. If something were to happen to the parents, the guardian could make medical or financial decisions to meet the child's needs. Unfortunately, by giving legal control to a single person, there are too many cases where unscrupulous people abuse their position and power. They siphon off the child's funds for personal gain.
Special needs trusts
A better option is to set up a special needs trust for a disabled child. This option may not be familiar to most parents, but it is an excellent way to provide for their child's present and future well-being. A special needs trust can fully protect assets meant for the child's care.
The trust is set up according to New Jersey state trust laws. Parents include their wishes in the trust document. The parents have considerable latitude in specifying details. The parents' choices for their child's care cannot be overturned or changed. The parents appoint a trustee to administer the assets of the trust. The trustee does not have the power to change or modify the trust in any way. In addition, the trustee cannot use funds for purposes other than those the trust states.
A trustee can be one person or more. A trustee can also be an institution, such as a bank. An institutional trustee must follow strict regulations, maintain exhaustive files on every action involving the child's welfare and preserve the child's right to state and federal programs.