Understanding the Concept of a Special Needs Trust
A trust is a powerful tool for ensuring your assets benefit the people and organizations you care about after you’re gone. By carefully considering who will manage it, what conditions are included to guide its use, and how taxes apply, trusts can help ensure that things happen according to your wishes while allowing beneficiaries easier access to those resources – with less taxation burden on them at this difficult time of loss.
Special needs trusts provide a unique way for those with physical and/or mental disabilities to receive financial benefits from loved ones. These trusts are designed specifically to safeguard beneficiaries’ eligibility for government aid by allowing family members the opportunity to supplement their fund without affecting any of these funds in place. Establishing this type of trust is an act that helps ensure recipients can maintain their lifestyle while receiving important assistance they depend on.
Choosing the Appropriate Trustee
Selecting a trustee for your special needs trust should be done with the utmost care and consideration. Find someone trustworthy who will look out for the beneficiary’s best interest, even in your absence. Although family is often an ideal choice, if that isn’t feasible then you can rely on the court to assign an outsider to manage this important task while honoring any wishes laid out priorly in writing by yourself.
Key Characteristics of a Special Needs Trust
One crucial aspect of a special needs trust is that it shields the trust assets from being considered in asset thresholds for government programs like Medicaid and Supplemental Security Income (SSI). The trustee, rather than the beneficiary, has full authority over the trust assets. As a result, the assets in the trust are ignored when determining eligibility for government programs. It is common for individuals to distribute their assets through a will to a loved one with special needs, but this may cause them to surpass the asset limits for SSI and/or Medicaid, causing them to lose their benefits.
A special needs trust can also be established to obtain the proceeds of a legal settlement on behalf of the individual with special needs. This is important to avoid disqualifying the beneficiary from government benefits due to a sudden increase in their assets. Additionally, if the individual with special needs is the defendant in a lawsuit, the funds in the special needs trust are protected from being utilized to pay out damages.
Consider a Special Needs Trust for Your Loved One with Special Needs
Building a special needs trust is an important step for looking after the long-term wellbeing of someone you care about. It can provide additional funds and support to meet specific requirements that other forms of trusts may not cover – potentially protecting their eligibility for government help if needed in years to come. By investing time into creating one, your loved ones future could be more secure should life take unexpected turns along the way.