Why set up a Special Needs Trust? A well-funded Special Needs Trust improves the quality of life of your child with special needs without every affecting their entitlements.
How much would I need to invest in to a Trust? Ideally, you should be placing €10-€30 per week in to your Trust and the earlier you start the better. The best way to do this is by diverting a small proportion of your child’s Domiciliary Care Allowance or Disability Allowance away for the future.
How do I go about funding a Special Needs Trust? There are four main options for parents who want to provide a lump sum of money in a Trust fund for their child, to help secure a better future.
1. Saving Plans
Parents have the option of saving money every month over a number of years this can lead to having a substantial amount of money that can be placed in a Trust. Key areas to consider when setting up a saving plan are; risk, management charges, levies, PRSI and taxes on your savings.
2. Pension Plan
The next option to investigate is saving through your pension, which has the added benefit of tax relief. Allowing you to reclaim back tax on any money you put into your pension. The money in your pension grows tax free and is exempt from tax unlike your savings. The added benefit of a pension is that it never goes against you when applying for entitlement. Again you will have to find an Advisor who can advise you of the best pension options to fund a Trust with.
3. The Sale of your Family Home
What are your plans for your family home when you pass away? The sale of the family home when you die can provide a good lump sum for all your family. I understand that nobody wants to think of that situation but it is important to have a plan for the family home.
If your plan is for your special needs child to live in the family home for the rest of their life then selling the home is not an option that will work. All families need to consult with their solicitor when deciding the future of the family home.
4. Trust Life Policy
This is very similar to a standard life policy that all parents have, except that it is specifically designed to funding a Trust. The issue with regular life policies is that they generally finish when your youngest child reaches the age of 21. Or you might have been cajoled into taking out a “whole of life policy” (do check the small print in your life policy) only to find out that when you reach retirement the insurance company has double or trebled your monthly premium to force you to stop the policy. At this stage all the money gone into the policy is wasted.
The foundation of all Trust should be a Trust Life Policy.
I regularly recommend this type of protection policy because you pay a fixed premium (€10-€30 per week) until you retire then you do not have to pay anymore into the policy. This is an ideal solution for most special needs parents.
If you die before your retirement – then the insurance company will double your tax free lump sum pay-out.
If you die after retirement – then the insurance company will pay out an adequate lump sum that can be deposited in to your child’s Special Needs Trust Fund.
I have personally seen the huge benefits of Trust Life Polices and recommend them to all my clients who want to have money in a Trust. Not only this but as you can imaging it is very hard to save €50,000 but provided you are in good health it is relatively simple and very affordable to take out a Trust Life Policy for €50,000.
On top of all this, because the policy only pays on your death then it will never affect you or your child’s entitlements.
If you would like further information on any of the above options or a free quote on how much per month it would be to set up a Trust Life Policy then call my direct line 021 482 3635 or email email@example.com