When you have a loved one with special needs, you must make careful considerations about how you will plan your estate. Luckily, there are options to help ensure those who need more assistance are protected and can still benefit from inheriting assets left to them. If you’re considering establishing a special needs trust to help your family members, you’ll need the assistance of a Washtenaw County trusts attorney to ensure you take the necessary steps. The following blog explores what you must know about this planning tool.
How Does a Special Needs Trust Work?
Many people who have special needs, such as intellectual or physical disabilities, rely on government assistance to help them live their life. However, when someone inherits assets and property from a will, they may no longer be eligible for these programs. This is because these programs have a resource limit, and if you exceed the set amount, you lose eligibility. These assets are generally cash or property that can be easily liquidated for cash.
However, establishing a special needs trust allows you to hold unlimited assets for this individual without jeopardizing their eligibility for these programs.
These are also referred to as supplemental needs trusts, as they do not supplant the need for these assistance programs, but rather act as a cushion. Often, these trusts will pay for things such as recreation, hobbies, and counseling, whereas their government funds pay for necessities like groceries and housing.
What Else Should I Know About This Option?
As previously mentioned, your loved one will still qualify for state and federal benefits if they are the beneficiary of a special needs trust. These programs include Medicaid, supplemental security income (SSI), and housing assistance as provided by the Housing and Urban Development Department.
It is also essential to note that these trusts are irrevocable, meaning they cannot be modified after their creation. However, the creator may place additional assets in the fund until the beneficiary’s 65th birthday. Because these trusts are irrevocable, they are essentially invisible to creditors. This means if you have to pay out a settlement from a lawsuit, any assets and funds in this trust are protected.
You will also need to consider who you will appoint as the trustee of this fund. This person is responsible for overseeing, managing, and distributing the assets held in the fund according to the wishes of the creator. You should choose someone dependable and responsible.
When you’re ready to start planning your estate, you’ll need to make separate considerations for those with special needs. At Collis, Griffor & Hendra, we’re here to help you every step of the way. Our legal team understands that this process can be confusing, so it’s our goal to ensure your estate plan is legally binding according to your wishes. Contact us today to learn more.