Do I Need Two Special Needs Trusts for Two Children?

When your family has more than one child with special needs, the last thing you want is more complexity. At the same time, most families with multiple children with special needs are stretched financially and desperately need to preserve access to government benefits like Medicaid and Supplemental Security Income (SSI) for their children.

Options Depend on Your Situation

Although ideally, each child will have their own trust, establishing a trust for each child may not be affordable and could make the administration of assets more complicated. Depending on a family's situation, it may be possible to set up one special needs trust with multiple beneficiaries to avoid unnecessary complications in an already stressful situation.

It must be noted that not every family can take advantage of one special needs trust when there is more than one child with special needs. For instance, if a child receives funds of their own from an inheritance or a personal injury settlement, they must have their own trust to hold the assets and they can't share the benefits with a sibling, even if the sibling also has special needs. In other cases, for example, if the children's needs are entirely different, it makes sense to have two trusts in place.

A Single Special Needs Trust with Multiple Beneficiaries

But for many families, one special needs trust can do the trick. In these cases, the trust must be funded with money, life insurance, and other benefits that do not belong to the beneficiaries, either while the people setting up the trust are alive or after they have passed away. The trustee of the trust should be familiar with all of the trust beneficiaries and should be capable of balancing competing needs.

In cases where both trust beneficiaries need assistance, the parents or other relatives setting up the trust will want to outline their thoughts about how trust funds should be allocated.

Avoiding Trust Administration Issues

Complications with trust administration make the selection of an appropriate trustee key. In some cases, especially when both trust beneficiaries are living in the same household, distributions from the trust for the benefit of one of the beneficiaries could affect the benefits the other child receives, even if they aren't currently receiving financial assistance from the trust. A trustee who knows the ins and outs of special needs law can avoid these situations.

If a trust donor feels strongly that a family trustee is called for, that trustee should enlist the help of a qualified special needs planner to assist with trust administration.

While not every family with more than one child with special needs can or should utilize a single special needs trust, many families can benefit from a joint trust, especially if the choice is between one trust or none at all. If you have more than one family member with special needs, ask a local special needs planner about whether a joint special needs trust fits your family.