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Protecting your loved one’s inheritance through a special needs trust

| Jul 28, 2020 | Estate Planning

If your child or grandchild has a disabling condition like down syndrome, autism or cerebral palsy, you know how important it is to provide for them, and you probably want to address their needs in your estate plan. However, providing the funds they need to maintain a comfortable and fulfilling life requires careful thought and planning.

Inheritance through traditional means could leave your disabled loved ones without benefits.

Because Medicaid and Supplemental Security Income (SSI) benefits are needs-based, these programs have strict income and asset limits. While you may want to leave your loved one funds in your will, that inheritance could put your loved ones above those asset limits and leave them without access to the benefits they rely on. Even a small inheritance could put their benefits in jeopardy—the asset limit for unmarried SSI recipients is just $2,000.

Special needs trusts could protect your loved one’s inheritance.

While leaving your loved one an inheritance in your will may put them at risk of losing their benefits, there is an option available to you: a special needs trust. By placing their inheritance in a special needs trust rather than leaving it to them directly, your loved one will have access to these funds while not owning them directly. This allows them to have the money they need for unexpected medical expenses, education, travel and other things that improve their quality of life.

It is important to remember that a trust requires a trustee to manage the assets and distribute funds to your loved one as needed. When planning a special needs trust, you should choose someone that will keep your disabled loved one’s best interest in mind.

If you have questions about how a special needs trust could protect your loved one’s inheritance and provide for them in the future, speak to an experienced estate planning attorney. They can help you create an estate plan that gives your child or grandchild the funds they need while maintaining the benefits they rely on.