Managing the Assets of a Special Needs Trust

The biggest concern facing families who have a child with special needs is how to preserve government benefits for that child, such as Social Security and Medicaid.  This concern can be easily satisfied through the use of a Special Needs Trust. 

A Special Needs Trust is a separate legal entity that holds and distributes assets in such a way that the disabled child does not lose eligibility for benefits such as food, clothing, shelter, and medical care.  As such, the Special Needs Trust should be drafted so that is does not duplicate these benefits, or be considered as the primary source of support for the disabled child.  Additionally, with the income from a Special Needs Trust being taxed in a compressed schedule, with rates starting as low as 15%, and escalating to 35% when taxable income exceeds $10,700.00, it is very important that the assets of a Special Needs Trust be properly managed.  This can be done through the use of a proper investment vehicle, which is comprised of tax deferred investments.