If you have a family member with special needs, it may be a good idea to set up a special needs trust to plan for their future financial support after you are no longer able to take care of them. You may want to leave money for your loved one, but this gift could affect their eligibility for government benefits. Using a special needs trust, you can preserve the disabled person’s eligibility for Medicaid and Supplementary Security Income (SSI), while leaving monetary assets for their support. This ensures that their quality of life isn’t affected in any way when you are not there for your loved one.
How a Special Needs Trust Works
Similar to other types of trusts, a special needs trust involves people taking up three major roles:
- A grantor, also known as a settlor, who sets up the trust and finances it.
- A trustee, who is designated by the grantor to manage the financial assets for the beneficiary.
- A beneficiary, who is the person suffering from the disability.
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The special needs trust is created during the grantor’s lifetime, and can be executed when they are alive or after their death through a will. Typically, the grantor chooses someone close to the beneficiary to serve as trustee, such as a sibling, close relative, or family friend.
Who can benefit from the Trust?
People suffering from a disability or likely to develop a disability latter in life may require lifelong financial support. Getting health insurance for a person with a disability may be difficult because they may never be able to get a job offering such incentives. This makes it vital to acquire coverage under Medicaid or SSI, because these programs are designed to offer benefits to people with limited resources and income. But disabled individuals become ineligible for Medicaid or SSI if their loved ones leave money and assets directly or in the form of inheritance for them.
This is where a special needs trust can help you. It enables you to leave funds for your disabled loved one, instead of giving it directly to them. In this way, even if you have put thousands of dollars in the trust, it won’t affect your loved one’s eligibility for SSI or Medicaid.
Who can Set up or Contribute a Special Needs Trust?
Except for beneficiary of the trust, anyone can set up or contribute funds and assets to a special needs trust. In a majority of cases it is created by parents of a disabled child, but it is not necessary for you to have a blood relation for setting up a trust or putting money in it for someone. There is no restriction on the number of trusts you can make for a particular beneficiary. Moreover, any type of asset can be kept in a special needs trust, such as money, collections, stocks, real estate, patents, a business, jewelry, and others.
If you have a loved one for whom you want to leave assets and property in a special needs trust, you should get legal counsel of an experienced estate planning attorney to understand the process. Contact Mary Ann Covone, P.C., Attorney at Law at 708-246-4911 or online today to schedule a free consultation and discuss your estate planning needs.