Competent estate planning is perhaps the best way to ensure that your loved ones are financially cared for in the long-term. This is especially true if you have a loved one who is disabled. These individuals can struggle to find financial stability on their own, particularly if they require an extensive amount of costly medical care and rehabilitation. If you have a loved one who is in this position, then you’re probably worried about how they’re going to get by when you’re gone. But estate planning, specifically a special needs trust, might be the answer to your problem.
The benefits of a special needs trust
There are many benefits to a special needs trust. Of course, the assets placed into the trust can be used to financially support your loved one, but more importantly these assets don’t affect your loved one’s ability to qualify for government programs like Medicaid and Supplemental Security Income. These government programs have income and asset restrictions that your loved one can quickly blow past if they receive assets through a normal trust or other inheritance. Assets from a special needs trust, though, won’t count toward those income and asset limitations. This allows you to provide an additional layer of financial protection for your loved one for a long time to come.
Limitations on the use of trust assets
It is important to note that there are limitations on how special needs trust assets can be used without affecting government benefits. For example, distributions of cash and retirement accounts are going to count towards those income and asset limits. However, special needs trust assets can be used to purchase a primary residence, a vehicle, furnishings, and even personal effects. The last category is relatively broad, which gives your trustee and your loved one some leeway in how trust assets are used.
Make sure you have an appropriately thorough estate plan
There’s a lot that estate planning can do for you. You just have to know what tools are at your disposal. Turning to the Internet for do-it-yourself resources is a mistake and can lead to devastating errors that have long-term consequences for your loved ones and your estate. So, if you want to protect your assets and your loved ones as fully as possible, then we encourage you to seek counsel from an experienced estate planning attorney.