When the Bhatias realized that their two-year old daughter Isha is autistic, their world changed forever. Isha, now 19 years old, is a lovely girl but is completely dependent on her parents, even for her basic needs. The universe of Bhatias has shrunk and everything that they do now is influenced by their daughter’s needs and well-being. Every now and then, the thought of mortality crosses their minds. They have been saving aggressively to support their daughter and have also bought insurance covers. But is that enough to protect their daughter’s future and to ensure her well-being?
There are countless parents whose situations could be similar. A special child in the home changes things in so many ways for the family that most parents with normal children will never be able to fathom or comprehend.
It would be stating the obvious if I say that for any child, the love, affection and care of parents is irreplaceable. In case of special children however, the parents must also ensure that their children remain safe and are cared for adequately after both the parents have expired. While eventually the child may turn into an adult, he or she may continue to need support in the later stages of life.
An Estate Plan is important for every individual. But in case of parents of Special children, it is critical. While generally a simple “Will” is enough in case of small family structures, it is not enough in cases where there are physically or mentally challenged members in the family. The primary reason is that the Will shall only allow the wealth of an individual to be transferred seamlessly to his heirs or beneficiaries, in this case the differently abled daughter. Will such people with disabilities be able to handle all the wealth and assets and the associated complexities? Also putting the wealth in the hands of such differently abled people could itself become a risk. For instance, if it is known that a particular disabled person is the owner of substantial wealth, there are chances that some unscrupulous person defrauds or even hurts such person.
In most such cases, setting up a “Private Family Trust” is an ideal solution. A Private Family Trust is a legal structure created under the Indian Trust Act, 1882. It is different from a charitable trust and can have as much flexibility or discretion as the settlor (person creating the trust) wants.
A Private Family Trust is an extremely powerful as well as legal structure and has been used by smart people around the world for centuries to manage their estate to their satisfaction.
There are some distinct advantages of a Private Family Trust over a simple Will. The trust could be used even during the lifetime of the settlors of the trust besides the heirs. The settlors can, at the time of creating the trust, decide the tenure of the trust; fix the roles and responsibilities of the trustees; define the benefits that the beneficiaries of the trust can draw from the trust regularly; set up the investment management principles to ensure safety and growth of assets; and also define how the assets would be distributed amongst the beneficiaries and in what conditions.
In case of parents with special children, through the trust structure, parents can achieve multiple objectives, one of which could be ensuring health, happiness, safety and well-being of their special children.
Let us examine how a Private Family Trust can be a useful structure for situations where the family has a special child.
The first big advantage of a Trust is that instead of the disabled person managing all the assets himself, the Trustees appointed in the Private Family Trust shall take up that responsibility. Power can be given to certain trustworthy individuals to appoint and remove trustees. To ensure that the Trustees manage the money prudently, the Trust document can specify dos and don’ts and mention in as much detail as possible, the investment management principles.
Through the Trust, the parents can plan exactly how much money should be given to their special child for their living expenses; what kind of nursing care shall be provided; take care of ancillary needs like maintenance of house and attendant staff; allow for some flexibility for withdrawals for any specific emergency purposes and finally create a process for the Trust to wind up after a certain period of time.
Considering that the Trust has a legal backing, any chances of misappropriation, fraud, coercion, mismanagement, exceptional loss, etc. become extremely rare and can be completely avoided by having a strong well drafted Trust structure in place.
One of the questions that come to people’s mind often is how do they trust the Trustees? What if the trustees do not do their job properly or misappropriate funds from the Trust? It is a valid question and that is why experts are needed to create the right structure where the Trustees can be supervised or if needed can be removed and replaced. There are many ways to secure the Trust, its assets and the rights of the beneficiaries. A qualified and experienced lawyer or firm can provide the right guidance based on specific situations.
One can regard the Private Family Trust as one’s alter ego. The way in which you act in your day to day life when dealing with your children, investing your money, spending your money etc. can be exactly replicated in the Trust structure. The settlors of the Trust have all the flexibility to design a structure that is a perfect fit for their family situation.
If someone has a special child at home, they should definitely consider creating a comprehensive Estate Plan and should do it sooner than later.