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Does My Child Need a Special Needs Trust Fund?

by on 10/03/2021 6910

Financial planning is tough, especially for parents or caretakers of children with special needs. There’s much to worry about, especially when ensuring that their special child’s needs are taken care of once their parent passes.

Kiddy123 had the chance to speak to Rockwills Trustee Berhad CEO, Mr. Azhar Iskandar Hew on the importance of setting up a special needs trust for your child’s security.

Kiddy123: What is special needs real estate planning? Does it differ from a special needs trust?

Mr. Azhar: Generally, estate planning is a preparation of distribution of wealth in the event of a person’s death. However, special needs estate planning is a bit more intricate. It’s designed around the needs of the special child, whereas parents or guardians can leave their assets when they pass, to be used for the maintenance of the child. The plan is child-centric and customizable to suit each child differently. It is carried out via a will, and available only upon the death of the benefactor.

A special needs trust however, can be made available urgently to the beneficiary if anything were to happen to the benefactor, not necessarily death only. It’s considered an express lane for your special child to continue maintaining themselves, of course with the help of a guardian and a trustee.

K: Are there different types of special needs trust?

A: There aren’t different types of special needs trust because each trust is designed around the needs of the special child. Parents can think of the special needs trust as the last piece of a jigsaw puzzle, putting everything in place. A special needs trust can also offer a peace of mind for parents for they know that once they’re gone, their child is secure financially.

K: How does a special needs trust work?

A: In the event that the benefactor passes, is missing, or under any other circumstances, the trust will be activated for use as soon as possible by the legitimate trustee. The trustee will then begin the process of carefully assisting the assigned caretaker of the special child financially using the money left by the benefactors in the trust. Calculations are done beforehand by the benefactor and trustee to ensure that the assets left in the trust are sufficient to maintain the child for the rest of their lives.

K: What is included in a trust?

A: Assets. Money, unit trusts, listed shares, and most importantly, a, or multiple life insurances or policies. Including a life insurance/policy brings stability to the trust and guarantee the child is financially comfortable throughout his or her life.

Other things that parents can include in the trust are payments for guardians or caretakers of the child, day-to-day cost of living, and more importantly, the name of the caretakers or guardians of the child once their parent passes.

One should always be mindful to contact their real estate planner every two years to review and/or if necessary, amend the details of the trust.

Does My Child Need a Special Needs Trust Fund?

K: When is the right time to sign up for a trust?

A: Don’t wait to start a trust. Start as soon as possible.

K: Why is a special needs trust important?

A: A special needs trust means that you’ve earmarked certain assets that are to be put in the trust. This will give parents or guardians peace of mind, knowing that their child will still be able to live day-to-day comfortably with the assets left in the trust.

Having a trust set up can ensure ease of payments through a trusted corporate trustee, who will then distribute the funds to the named caretakers or guardians for the use of maintaining the special child.

K: What can a special needs trust pay for?

A: It can pay for a variety of things. Medical needs of the child, therapy, nursing, education, and also day-to-day needs of the child. Other than that, the trust can also pay for holidays or vacations and flight tickets for both the child and their caretaker. Benefactors can also ask the trustee to give an angpau to the child for every special occasion as a token of remembrance for when the parents or guardians are no longer around.

K: Who qualifies for a special needs trust?

A: Parents or guardians of individuals who are not able to care for themselves currently and in the future. A special needs trust can also be set up for someone other than special needs children such as for the frail and elderly. A special needs trust can be set up by both Muslims & non-Muslims.

K: What do you need to start a trust?

A: Assets to add into the trust. One of the most important and stable assets to add into a trust are death or disability insurance policies with high insurance pay out. This can guarantee that your child will be able to maintain themselves if anything were to happen to the benefactor. Other than that, individuals can store cash, listed share, and/or unit trusts in the special needs trust. One should always remember that liquidity is important so avoid adding properties or something similar into the trust.

K: Any other additional notes for families to keep in mind if they wish to set up a trust?

A: Set up a trust early. Don’t wait for tomorrow, start today because you’ll never know what will happen to you and your child come tomorrow. Once a fund is set up, remember to always review the trust every 1 or 2 years, and take the time to assess the trust to see if it’s enough for the child to live a long and prosperous life, even without you by their side.

Look for professional estate planners. They can help you review and calculate your assets in the trust for your special child. Professional estate planners can also help set up the trust to include your other children, be it special or not, for them to benefit from the trust once you’re gone. Always keep in mind that it’s better to have both a will and a special needs trust because although a will legally will take longer, but a special needs trust can begin immediately after death or disappearance.

Does My Child Need a Special Needs Trust Fund?

En. Azhar Iskandar Hew is Group CEO of Rockwills International Berhad and the CEO of Rockwills Trustee Berhad. He is also the Director of Rockwills Advisory Services Sdn Bhd and holds the Bachelor of Laws (Honours) degree from the University of London. Prior to his current position, he served as the Deputy CEO of Rockwills Trustee Berhad. He joined Rockwills in June 1997 as a Legal Executive and later became the Head of the Training Department. In order to gain the necessary experience in the trust industry, he became the Vice President, Legal of a reputable trust company in 2003. He rejoined the Rockwills Group in 2005 as the General Manager of Rockwills Trustee Berhad to begin its operations. Azhar has spearheaded the creation of various innovative trust products and services including BVPT, UDeclare, UPrepare, OPC Trust and Pet Trust, which sets the company apart from its competitors.

Azhar is the Deputy Chair of the Society of Trust and Estate Practitioners (STEP) Malaysia and is an Associate Financial Planner (AFP) holder. He has more than 23 years of experience in the estate planning industry as a will and trust practitioner and speaker. Over the years he has trained more than 15,000 people primarily from leading financial institutions and life insurance companies as well as financial planners in Malaysia, Hong Kong, and Singapore. Occasionally, he facilitates courses on estate planning that are approved by the Securities Industry Development Centre (SIDC), Financial Planning of Malaysia (FPAM) and The Federation of Investment Managers Malaysia (FIMM). He was a regular article contributor to Smart Investor and Malaysian Business on the areas of Estate Planning and Private Trust.

About Rockwills Group

Rockwills International Group is the largest provider of solutions and support services in the areas of trusts, succession, management, and distribution of wealth. It has shareholders’ funds exceeding RM50 million and professional indemnity cover of RM100 million. It has done over 250,000 wills and 10,000 trusts (with more than 1,000 trusts involving special needs children) and hold more than RM25 billion in assets under trust management.