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Estate Planning for Special Needs

Caring for a child or loved one with special needs means taking extra precautions when it comes to estate planning. Not only is this person likely dependent on you in some capacity from a physical and financial standpoint, but may require additional support even after you are no longer around to provide it. That is why parents and trustees of those with special needs must take extra precautions when it comes to estate planning. The first step is to think about the benefits of a special needs trust.

Understanding special needs trust

Setting Up a Special Needs Trust

Those with special needs are usually eligible to receive government benefits for financial security and medical support. However, if the individual is left with an inheritance of certain assets, especially cash, they could be disqualified from these benefits. Setting up a private special needs trust can help protect your loved one by providing them the gifts you leave behind, while also receiving the government support. In this case, you’re leaving the inheritance to the trust instead of your loved one so they may continue to be eligible for these benefits.

Appointing a Trustee

Once you have the trust in place, you must name a trustee who will be in charge of the property of the trust and have full discretion of how the money is spent on behalf of your dependent with special needs. Since your dependent will have no control over the trust, those who administer the government-provided Supplemental Security Income and Medicaid benefits will not look into the trust when checking your dependent for their eligibility. Make sure to fully vet your trustee as they will be responsible for paying taxes, keeping up with the laws of executing the trust so your beneficiary can continue to receive government support, keeping records up to date, and investing the assets of the trust.

Allocating the Funds

The assets of the trust cannot be directly given to the beneficiary as that could interfere with his or her government benefit eligibility. This is why it’s vital to have a fully vetted and trustworthy trustee. The trustee can use funds from the trust to purchase items on behalf of your beneficiary. Examples include paying for specialty medical bills, therapy, caregivers, extra household expenses, and vacations.

Terminating the Trust

The trust will be terminated on the death of the beneficiary, if the beneficiary no longer needs or is ineligible for government assistance, or when the assets within the trust are depleted. Specific instructions are written into every special needs trust as to how the assets should be handled after the beneficiary passes, and it is the trustee’s responsibility to carry out these instructions. This is to be done promptly after the death of the beneficiary, and we highly recommend it is done with an attorney to avoid any confusion about the trust’s language.

It’s important to set up a trust for your dependent with special needs. Even the smallest gift of money could deem your loved one as ineligible for government assistance, which could jeopardize their future and leave them desperate for help. Contact the attorneys at Anselmo Lindberg & Associates to get help setting up your special needs trust and looping it into your overall estate plan.

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