A special needs trust is a great way to provide for a loved one while protecting his or her ability to receive government assistance, such as Supplemental Security Income and Medicaid. However, there are restrictions that are placed on special needs trusts, and you and the trustee need to understand those restrictions to ensure that proper estate planning can be undertaken.
What can special needs trust assets be used for?
Some people mistakenly think that special needs trust assets can be used for anything without affecting countable income for purposes of qualifying for government programs. This isn’t the case. For example, if your loved one has more than a certain amount of countable assets, then he or she may not qualify for SSI. Money in checking and savings accounts, retirement accounts, and real estate that is not your loved one’s primary residence can all reduce or even eliminate one’s access to important government benefits.
So what can special needs trust assets be used for without affecting government benefits? There are a lot of things, actually. A lot of caregiving and medical expenses not covered by government benefits fall under a exceptions to income requirements, but there are other things, too. For example, trust assets can be used to purchase one motor vehicle and a primary residence without affecting your loved one’s ability to qualify for government benefits. Even furnishings for the home and personal items won’t be counted against your loved one when qualifying for SSI and Medicaid.
Fully assess your estate planning options
What is important to remember about estate planning is that it is a customizable process that gives you a lot of control over your estate and the power to use it to suit your and your loved ones’ needs. As highlighted by the particularities of the special needs trust, the estate planning process can be fraught with nuances. Understanding the details, though, is what can allow you to develop the best estate plan for you and your loved ones. That is why many people choose to seek out help from an estate planning attorney who can help guide them through the process.