The following story is based on an actual series of events, with some names and circumstances fictionalised. Any similarity to any person’s name, character, or history is coincidental and unintentional. It is about special needs trust and how it works in the real world.
Elsie thought she had it all when she walked down the aisle with her beau and then to be blessed a year later with a beautiful bouncy baby, Ann.
Little did she reckon that life would be cruel. It all started one afternoon when little Ann turned blue. It was heart-wrenching for her to see the baby so sickly with her life hanging on a thread. But Ann was a fighter. She survived but became mentally handicapped.
A much relieved Elsie prepared herself for the long haul of bringing up a special needs child. Her whole life was now dedicated to Ann, which took a toll on her relationship with her hubby. They grew more and more apart, and it eventually led to a divorce.
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As a single parent of a child whose condition requires special attention, Elsie juggled between work and caring for her child. We were always overhanging and worried that Ann should not be around to care for her.
A friend advised her to set up a Trust for her daughter, but she brushed off the idea, mistakenly thinking that it was something in the League of the Rich. She took comfort that she had many siblings and started to set aside money for her brother to use for Ann’s maintenance, just in case.
Unfortunately, Elsie and her brother both died in a car accident. The money kept by the brother for Ann was frozen in his bank account, pending a letter of representation from the courts. In the meantime, the immediate needs of the special child were left unattended while the uncles and aunties bickered about who should take care of her and who should advance the money for the maintenance costs. Ann became nobody’s child.
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Special Needs Trust Comes Into The Picture
Elsie could have averted such a situation by setting up a Special Needs Trust with a trusted company to take care of her medical needs and maintenance. With increasing awareness and understanding, more people now know it is not true that a Trust can only be set up by wealthy people.
In this case, she could have started by using her life insurance policy, unit trust investments, or even money in her bank account as the source to fund her Special Needs Trust instead of placing it in her brother’s account. Even if the sum is modest, she could set it up first and then increase it over time. In fact, the cheapest and fastest way to set up a trust is to fund it with a life insurance policy.
Through the Special Needs Trust, she can also instruct the trustee to use the trust properly to pay for the upkeep of the house where her child is staying and maintenance costs for supporting the child. Instead of relying on help from relatives, she could also have instructed the trustee to make regular maintenance payments out of the income earned from the trust property.
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Generally, it is also better to appoint a licensed trust company instead of an individual to be the trustee because an individual is liable to die, fall ill or meet with an accident, become incapacitated, or even become bankrupt.
Besides these problems, other possible risks may arise, such as monies being handled dishonestly or incompetently and failing to cater to the child’s care. For those parents who have children, whether with special needs or not, give them a good head start in life by planning and setting a special needs trust specifically for them, especially if you are a single parent.
About Rockwills International Group
Rockwills International Group, now in its 28th year, pioneered professional will writing in 1995 and has since evolved into the leading estate planning specialist in the country. It is today the largest provider of solutions and support services in trusts, succession, management, and distribution of wealth. It has shareholders’ funds exceeding RM50 million. It has done over 280,000 wills and 15,000 trusts and holds more than RM25 billion in assets under trust.
