Protecting More Than Assets How a Special Needs Trust Safeguards Benefits and Future
One of the reasons many people establish an Estate Plan is to ensure their children have everything they need if something were to happen to them. This becomes even more critical when children with special needs are involved. When you’re gone, how will they continue with the same quality of life? You may think you could leave an inheritance to help cover the costs not associated with Medicaid or Supplemental Security Income (SSI), but that could actually put those benefits at risk. Instead, you should look into a Special Needs Trust. A Special Needs Trust operates similarly to an Irrevocable Trust with extra caveats. You establish and fund your Trust before naming a trustee to oversee the distribution of assets. The trustee role is incredibly important as it comes with a high level of responsibility. In most cases, you’ll want to consider a professional trustee like an accountant, attorney, or institution, as they’ll ensure the trust does not interfere with the beneficiary’s public benefits.
A Special Needs Trust is not meant to cover everything the beneficiary will ever need. It is designed to help supplement what they receive from SSI or Medicaid, which is why they can’t receive the money directly through an inheritance. To qualify for SSI, individuals cannot possess assets worth more than $2,000. Assets within a Trust do not count toward that amount. Trustees must be very careful about distributing assets, as they don’t want to push the asset amount over $2,000 or use funds from the Trust for things that SSI or Medicaid already cover. While various programs and government benefits can help offset the costs associated with food, shelter, transportation, and medical care,
funds from the Trust can be used to pay for things like personal grooming, clothing, out-of-pocket medical or dental costs, education, home furnishings, vacations, and more. Establishing and funding a Special Needs Trust is one of the best ways to protect your child, as it can spread your disbursements, avoid big tax payments, and supplement government benefits. You should not wait on this, as you want to ensure they are protected if the unimaginable happens.
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