When you have a loved one with special needs, you may have questions about how you can help them in life. Providing for them as a part of your estate plan may help you give them support, but it is important to choose your estate planning tools wisely to protect both their inheritance and their social security benefits. One important tool to consider is a special needs trust. What are the benefits of this type of trust?
1. Inheriting money through a will may put your loved one’s eligibility at risk.
In order to receive public disability benefits, people with special needs must meet specific requirements. One of the strictest is that, minus some exemptions, the government only offers benefits to people with less than $2,000 in assets. Because of this, leaving money to your loved one in a will may allow them to receive a large sum of money outright, but it could also leave them without the benefits they rely on.
By establishing a special needs trust, however, you can list your loved one as the beneficiary of the trust instead of the owner of those assets. This means that they can benefit from the funds that you place in trust without losing access to support.
2. The funds that you place in trust can give your loved one a more comfortable life.
Does your loved one want to pursue an education? Do they love travel? Do they want to make improvements to their home? These pursuits can be expensive, and the asset limits placed on people who receive disability benefits could put them out of reach. However, the trustee of a special needs trust can provide your loved one with funds from the trust to make their life more comfortable or to entertain them.
3. Someone you trust will act as trustee.
When establishing a trust, you choose the person or people who will make investments, manage the taxes for the trust and provide financial support to your loved one. This allows you to choose someone that you can rely on to be there for your loved one and to manage the funds carefully.
You can also choose two trustees or name advisors to the trustee. While one trustee may mismanage funds, naming multiple people ensures that your loved one’s inheritance is properly protected.
With careful planning, you can create an estate plan that meets your loved one’s unique needs for years to come.