Why you should consider a special needs trust as part of your estate planning

Thinking about who will care for a family member with special needs in your absence can cause significant worry. Fortunately, there are various ways your estate plan can provide for your loved one. One of those options is a special-needs trust.

What is a special needs trust?

A special needs trust, or supplemental trust, is a legal contract that allows a person to distribute assets to a beneficiary with special needs or a disability. These specialized trusts work to ensure that the available assets will be distributed during the beneficiary’s lifetime in a way that does not compromise any of the government benefits for which the beneficiary may qualify.

What important questions need to be answered?

Many important questions may influence your decision about your special needs trust, such as:

  • Who will you establish as the manager of the trust? It is usually best to leave the management of the trust to a company that specializes in special needs trust asset distribution. Your estate planning attorney can advise you further. 
  • What other needs of the beneficiary should be established as part of your will? Knowing where your beneficiary will live, what assistance they are likely to need as they get older, and who else will have a say in their care should all be well documented and clearly understood.

Why should you consider a special needs trust instead of a traditional inheritance?

A special needs trust can ensure that the beneficiary does not lose any governmental assistance, such as Supplemental Security Income payments or Medicaid insurance benefits, because of a sudden increase in available assets. The beneficiaries can continue to receive a modest monthly income from the trust to cover their daily purchases and any extra needs that come up, but can also continue to benefit from the government assistance they are entitled to.

It is prudent to establish this trust early on in your estate planning. The process of choosing a trustee who is knowledgeable and available for the long-term management and distribution of assets is vital. Depending on the special needs of the beneficiary, the process of drawing up and enforcing the trust requires a specialized and case-by-case analysis. It is wise to seek the assistance of an experienced estate planning attorney to ensure that the complexities do not interfere with the fulfillment of your wishes for your beneficiary.

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