It is important to provide for your loved ones and ensure they are financially stable after you pass away. This can be fairly involved in and of itself, but you face additional challenges when you are establishing an estate plan with a beneficiary who has special needs. Fortunately, there is a particular kind of trust that addresses the circumstances common to many people with disabilities.
There are a few things you should know about a special needs trust and how it can benefit both you and your beneficiaries.
1. Makes benefits adaptable
One of the greatest benefits of a special needs trust is that you can adapt the terms to the specific situation your child’s disability puts him or her in. If your child has a permanent disability and needs someone to provide physical care and manage finances, you can establish terms of a trust to account for this. If the disability prevents him or her from self-care, but does not affect the ability to make decisions regarding finances, you can include this in the terms.
2. Does not jeopardize benefits
If the beneficiary of the trust receives Supplemental Security Income, Social Security disability benefits or other government benefits, the value of a special needs fund typically will not jeopardize the receipt of these benefits. This is an important consideration as any income your child has may affect eligibility for other benefits, such as Medicaid.
3. Covers a wide range of needs
Special needs trusts can cover a range of needs. For example, if your beneficiary is in some way incapable of using funds prudently, a special needs trust can limit his or her ability to use them irresponsibly because the trustee is the person or entity in charge of the assets.