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How can a special needs trust benefit your heirs?

| Dec 5, 2020 | Estate Planning

Trying to ensure that a person who has special needs is cared for even after you pass away is a challenge. It comes with a delicate balance of trying to ensure they can get what they need without doing anything that can have a negative impact on their ability to receive assistance from the programs they depend on. 

Some people who have special needs rely heavily on need-based programs, such as Medicaid. Because of this, you can’t just leave them a windfall inheritance because it could mean that they don’t qualify for those programs. There is an answer to this conundrum that you might consider if you have a loved one who requires special help and that you want to care for after you pass away – a special needs trust

What is a special needs trust?

A special needs trust is irrevocable, so once it’s created and funded, it can’t be changed. It sets a trustee over the assets, which can be used for specific expenses of the person with special needs. Because the person who has special needs can’t access the contents of the trust directly, the contents of the trust won’t count as their assets for the purpose of need-based programs. 

How do you set up a special needs trust?

A special needs trust should be set up by your attorney. There’s some special wording that must be included in the trust so that it can’t be misused. It’s imperative that these trusts are handled appropriately so they can serve the purpose you intend. Working closely with your lawyer can help you to ensure that your entire estate plan, including any special needs trusts, are set up properly.