How Much Money Do You Need to Fund a Special Needs Trust?

How Much Money Do You Need to Fund a Special Needs Trust?

If you are thinking about forming a special needs trust, you may be wondering how much money you need to fund it. In truth, there is no way to know how much your child will need for the rest of their lifetime, nor what government benefit programs will even exist decades from now.  However, there are some ways to try and make some educated guesses about what they might possibly need.

First, evaluate your child’s specific needs to determine if there are recurring costs or large up-front costs that could be paid by SNT funds. For example, is there an expensive medication not covered by insurance, Medicare, or Medicaid that your child will likely take for many years? Or is there a piece of medical equipment your child uses every day that will wear out or break and need replacement that is not covered by private health insurance, Medicare, or Medicaid? Make a list of these costs and add them up over time. While it is very unpleasant to think about your child’s life expectancy, it can factor into your estimation of recurring and large up-front costs.  Moreover, think about other costs such as contributions to organizations providing services to your child, these might be the largest expenditures that your child’s SNT may have.

Second, determine what kind of trustee you will use to oversee the trust – family member, friend, or institutional trustee like a bank, trust company, or non-profit organization. Some family members will agree to act as a trustee for free, but their lack of trustee-specific knowledge can be a concern. Private individuals and institutional trustees charge fees for acting as trustees. Some professional trustees will not take on the responsibility if the trust’s assets have a lower value. Others charge fees on a sliding scale based on the assets’ value. The fees tend to consist of a percentage of the asset value held in the trust.

Third, consider your family’s financial situation over the long term. Will you place a large portion of assets from your estate into the trust, anticipating that the rest of your family will support themselves, or will you allocate a smaller portion so that you can give to other family members? Think about whether you will help your children with college tuition, whether your family may move and incur relocation costs, and whether you plan to have more children. Perhaps life insurance proceeds or bequests will be added to the trust in the future – talk to your relatives about their estate plans relating to the child with special needs. All of these items factor into how much you need to or can afford to contribute to the SNT now and in the future.

Many families’ primary concern about SNT funding is running out of money to cover the lifetime needs of their child.  Once the inheritance is received by the SNT, the Trustee might consider buying annuities in combination with other more liquid assets to provide a steady stream of funding over time as well as liquidity for sudden needs.  You should speak to a financial advisor that regularly deals with the funding and investment management of special needs trusts as well as your special needs planning attorney to discuss the funding options that are best for your family.

Rubin Law is the only law firm in Illinois exclusively limited to providing compassionate special needs legal and future planning to guide our fellow Illinois families of children and adults with intellectual disabilities, developmental disabilities, or mental illness down the road to peace of mind. For more information, email us at or call 866-TO-RUBIN.