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Things you need to know about a special needs trust

On Behalf of | Jul 6, 2017 | Blog |

Are you concerned about what will happen to a loved one with a disability after you pass on? If so, one of the best things you can do is create a special needs trust. This may not put your mind entirely at ease, but it will go a long way in helping you feel better about the future.

As the name suggests, a special needs trust is designed to benefit a mentally ill or disabled beneficiary. Since the person may not be able to make decisions on his or her own, you can create a trust to ensure that he or she is taken care of after your death.

The Benefits

In many cases, a person with a disability qualifies to receive government benefits, such as Medicaid, Supplemental Security Income, subsidized housing, and vocational rehabilitation.

If you leave assets to a person with special needs via a will, it may disqualify him or her from receiving these government benefits in the future.

Through the use of a special needs trust, however, this is not a concern. The trustee maintains control over the funds, meaning that trust assets don’t come into play when considering eligibility for government benefits.

Gaining Access to the Funds

If the trustee directly provides your loved one with money, it could damage his or her ability to receive government benefits.

This is why it’s best for the trustee to use the funds to purchase necessities for your beneficiary. Regular expenses can include but are not limited to: medical costs, vehicles, education, vacations, groceries and personal care items.

Since there is so much gray area regarding special needs trusts, it’s important that you know what you should and should not include. Along with this, you need to use the proper language as to avoid a situation that could jeopardize your loved one’s government benefits after your passing.

These are just a few of the more important things you need to know about a special needs trust. If you need to create this type of estate planning document, learn more about the best approach and then move forward once you are comfortable with what you should and shouldn’t be doing.

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