My 30-year-old daughter, who is mildly autistic, lives with my wife and me. She is employed by a nonprofit that hires the disabled, and makes about $25,000 a year, most of which I conservatively invest for her, since she'll never be a large earner. Otherwise I am her sole means of support. She has a younger sister who may eventually act as guardian. Health insurance is not a worry; since I am retired military and she is permanently disabled, she gets all of her healthcare for free on base. But I'd like to know how to ensure that she's always taken care of financially? – M.P., Fairfax Station, VA

The best answer is probably a special needs trust, also called a supplemental needs trust, says Christopher Waddell, a financial planner in Vienna, VA. It's intended to hold assets for the benefit of a disabled person to supplement any government benefits that might apply—and it's considered a "non-countable" asset, meaning that it won't disqualify your daughter for those benefits. You can set up a special needs trust now and designate the parts of your estate that should be awarded to that trust upon your death as well as an appointed person would handle the trust on behalf of your daughter after that time. "It would provide the infrastructure and administration that the parents are currently providing," he says. "And it wouldn't burden her sibling."

You can appoint your other daughter as the trustee, but it could be a lot of responsibility—and tedious administration—for a family member, depending on the size of the trust. Waddell typically suggests paying a corporate trustee to do the job, at a cost of about one percent of the assets per year. "I encourage people to name a loving relative as a trust 'protector' to provide oversight for a corporate trustee," Waddell says. "So the family is still in charge, but they don't have to be writing checks and filling out tax returns."

Being retired military, you might be able to have a special needs trust established for free through your local Judge Advocate General (JAG) office, Waddell says. That's definitely a good place to start, in any event.

--Kate Ashford

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