A trust is an effective tool of estate planning for families with special needs children. By creating a Trust, parents can decide who controls the assets and who benefits not only during their lifetime, but even after their death. There are different types of trust structures to be created in different situations for specific benefits, besides tax advantages too.
What Is A Trust?
In simple words, a trust is an arrangement wherein a Sponsor settles the money for the benefit of a person or group of persons (family), which a person (trustee) or group of persons (Trustees) holds and manages as the nominal owner for the benefit of those beneficiaries. The arrangement derives its benefit from the fact that the trust and not any individual is a seperate tax entity which is the owner of the properties. Thus a trust is free from any personal claim or even court attachments, in most situations. The Indian Trust Act 1882 is the act under which trusts are formed and managed.
A trust, in general, will have following elements:
- The author or settlor of the trust (Person who creates a trust )
- The trustee/s (Person/s who manage the trust)
- The beneficiary/ies (for whom the trust is created)
- The trust property or subject matter of the trust ( assets managed by the trust)
- The objective of the trust ( trust purpose)
Advantage Of Special Child Trust
Creating a trust for special needs child life long care is probably the most viable option. A special child trust has mainly following advantages:
- There is no restriction on settlor/s or those who can create the trust. Also, there is no age restriction to become a trust beneficiary, who can be a minor or even a senior.
- There are no standard terms of the trust and the trust deed can be short or long enough to accommodate the needs of child care.
- As trust is a separate legal entity, no other person including creditors can have a say on the legacy managed by the trust.
- A trust does not go through a probate which is the main advantage vis-a-vis a Will.
- Whoever creates the trust can appoint the initial trustees.
- A trust works only for the beneficiary, which means the assets it owns can be utilized only for the benefit of the child thus securing the legacy parents’ wishes to leave for the child.
- Most importantly a trust avoids any conflict among family members
Thus for a special needs child family forming a trust brings larger advantage. The question- What After Us? can be answered through this structure when aligned with other legal documents.
Visit our Trust Services section to know the list of services we offer to special needs child trust.