How should I distribute my assests to my special needs child and my other children?

Parents should consider the possibility of leaving their retirement benefits to children without disabilities and leave other assets—cash, stocks, real estate, insurance, etc.— to the special needs trust. Leaving non-retirement assets to the special needs trust avoids the unsatisfactory consequences associated with the shorter pay-out required when the special needs trust names an older contingent beneficiary or where the parents would like to name a charity as a beneficiary of the trust. The retirement funds left to the children without disabilities can be stretched out to the extent permitted by law, and more of the favorable tax treatment and opportunities for tax deferred growth can be maintained.

While Roth IRAs do have mandatory annual distributions, they are not taxable to the beneficiary. Accordingly, the Roth IRA may be a good choice for funding a special needs trust, especially if the IRA names other individuals relatively near in age to the child with disabilities as the successor or contingent beneficiaries.

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