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Sometimes, due to an inability to determine whether a child with special needs will be self-supporting and earn income as an adult, parents cannot assess the child’s future eligibly for government benefits. This is often the case with children who have Asperger’s syndrome or mild autism.

In such a case, locking assets up in a Special Needs Trust may not be the best way of utilizing assets for the child’s care. There are strict guidelines for the disbursement of a Special Needs Trust’s assets, which are to be used to pay for services not covered by Medicaid, for recreational and cultural experiences and, for the most part, services or items that would enrich the beneficiary’s life. It is important, therefore, that the trust has sufficient flexibility to adapt to changing circumstances. One way of doing this is to initially structure the trust as an inter vivos trust for the benefit of the child. The trustee could have the ability to make income and principal distributions to the child for health, education, maintenance, and other support purposes throughout the child’s life.

If the trustee believes that the child is capable of controlling his finances, then he would have the option of terminating the trust and distributing its assets to the beneficiary. If, however, the trustee determines in the future that the child cannot support himself and would be eligible to receive government assistance, the trustee would have the flexibility to convert this trust to a Special Needs Trust.

This flexible structure permits the child to achieve his potential and allows the trustee to use trust assets in the child’s best interests.

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