How a Special Needs Trust Can Help You and Your Family

 Posted on December 12, 2022 in Trusts

It can be incredibly challenging to plan for a time when you are not around to care for your loved ones. However, facing this reality by creating an estate plan is one of the most selfless actions you can take. This is especially true if you have a child, sibling, or another close loved one who has a serious disability. If you have been responsible for caring for a loved one who cannot care for himself or herself, you may want to find a way of providing for him or her after you pass away. One way to do just this is through an estate planning tool called a special needs trust, also known as a supplemental needs trust.

Planning for the Care of a Loved One with Special Needs

A special needs trust or supplemental needs trust is an estate planning instrument that can be critically important to individuals who provide care for a disabled loved one. This instrument works by allowing the individual to place funds in the trust, which can then be used for the future care of their disabled loved one. A special needs trust allows you to put aside money for your loved one without affecting the disabled person’s eligibility for government assistance programs. Special needs trusts can be funded through gifts and inheritances or a lump-sum settlement. Without a special needs trust, money left to your loved one could potentially disqualify him or her from certain government aid programs.

Leaving Money to a Loved One Could Increase His or Her Available Assets Too Much

A substantial portion of government-funded aid is distributed to individuals under a certain income level. For example, Medicaid, Supplemental Security Income, and housing subsidies all have income criteria that a person must meet in order to qualify for financial assistance. If you leave money to your disabled loved one without the appropriate estate planning instrument, it could be counted toward their assets. If the funds are substantial, this money could bump your loved one’s income up to a level that makes them ineligible for programs with income or asset limits.

A properly drafted special needs trust helps you ensure that your disabled loved one will receive the funds he or she needs in a way that does not jeopardize their participation in other government assistance programs. Ideally, a special needs trust will help your disabled family member enjoy a high quality of life even after you have passed away.

Contact a California Estate Planning Attorney for Help

Drafting a special needs trust or other estate planning instrument can be quite complex. For quality legal assistance from a knowledgeable California special needs trusts lawyer, contact the Law Office of David Schechet. Schedule a free consultation by calling 800-282-4731 today.

Sources:

http://www.americanbar.org/content/dam/aba/publishing/rpte_ereport/te_lewis.authcheckdam.pdf

http://www.americanbar.org/newsletter/publications/law_trends_news_practice_area_e_newsletter_home/0501_estate_financialplanning.html