If you're the parent of a child with special needs, you know how important it is to plan for the eventuality that you may no longer be able to care for your child. Special Needs Planning (sometimes referred to as disability planning) has to do with putting a comprehensive plan in place for when that day arrives.

Most parents understand the financial cost of caring for a special needs child and are willing to take the necessary steps to ensure that their child has sufficient resources to last the rest of their life.  Typically this is done through the use of life insurance.

However, it is absolutely crucial that whatever financial tools are put in place, that they be set up in a way so as not to jeopardize any governmental programs your child may be eligible for.  For instance, if your child is receiving supplemental security income (SSI) and upon your passing they receive the proceeds from a life insurance policy, they will loose their SSI eligibility.  There are ways that you can provide for your child's future without jeopardizing their eligibility for government benefit programs.

One way to provide for the future of your child is with a Special Needs Trust.  Special needs trusts (also known as "supplemental needs" trusts) allow a disabled beneficiary to receive gifts, lawsuit settlements, or other funds and yet not lose his or her eligibility for certain government programs. Such trusts are drafted so that the funds will not be considered to belong to the beneficiary in determining eligibility for public benefits.

As their name implies, special needs trusts are designed not to provide basic support, but instead to pay for comforts and luxuries that could not be paid for by public assistance funds. These trusts typically pay for things like education, recreation, counseling, and medical attention beyond the simple necessities of life. (However, the trustee can use trust funds for food, clothing, and shelter if the trustee decides doing so is in the beneficiary's best interest despite a possible loss or reduction in public assistance.) Special needs can include medical and dental expenses, annual independent check-ups, necessary or desirable equipment (such a specially equipped vans), training and education, insurance, transportation, and essential dietary needs. If the trust is sufficiently funded, the disabled person can also receive spending money, electronic equipment and appliances, computers, vacations, movies, payments for a companion, and other self-esteem and quality-of-life enhancing expenses.

Often, special needs trusts are created by a parent or other family member for a child with special needs (even though the child may be an adult by the time the trust is created or funded). Such trusts also may be set up in a will as a way for an individual to leave assets to a disabled relative. In addition, the disabled individual can often create the trust himself, depending on the program for which he or she seeks benefits. These "self-settled" trusts are frequently established by individuals who become disabled as the result of an accident or medical malpractice and later receive the proceeds of a personal injury award or settlement.