Figuring out how your assets will be divided once you pass away can be challenging from both an emotional and a logistical standpoint. Many people find it difficult to think about their own mortality, and determining how best to provide for you loved ones can be tricky if you’re unfamiliar with the estate planning process.
The subject can be even more complicated if you have a loved one with special needs. How are you going to ensure that they’re taken care of when you’re no longer there to support them?
Fortunately, the estate planning process has an answer for that: the special needs trust. This trust allows you to provide financial support to your loved one without negatively impacting their ability to qualify for government programs like Medicaid.
A special needs trust can allow your loved one to remain financially stable while still acquiring the treatment and care that they need.
What can special needs trust assets be used for?
Special needs trust assets can be used for any of the following without negative implications:
- Medical care not covered by insurance or Medicaid
- Dental care not covered by insurance or Medicaid
- Medically necessary equipment, like wheelchairs and wheelchair-accessible vans
- One vehicle
- Training
- Education
- Home Furnishings
- Travel, including those costs necessary to bring a companion
- Appliances
- Electronics, including a computer
- Rehabilitation services
- Insurance
- Legal expenses
As you can see, there is a wide array of appropriate uses for special needs trust assets. This provides a huge amount of support for your loved one, giving them financial stability and allowing them to live the life you want for them.
Are there restrictions on the use of these trust assets?
Yes. There are some uses that may render special needs trust assets income for purposes of determining eligibility for Medicaid and some Social Security benefits. This includes using the assets to pay for:
- Housing
- Food
- Utilities
- Property taxes
Cash distributions from the estate can be problematic, too. Keep in mind, though, that these sorts of distributions aren’t barred. They may just result in a reduction in public assistance that your loved one receives.
The importance of choosing a trustee
Given the intricacies and the importance of a special needs trust, it’s crucial that you have someone responsible and trustworthy managing the special needs trust. This individual should have a grasp on how these trusts work, how distributions can impact a loved one’s benefits, and what your loved one needs to live a successful life.
Be sure to vet your options before making a final decision on a trustee.
Should a special needs trust be part of your estate plan?
If you have a loved one with special needs, then this trust can prove immensely beneficial. Yet, it’s just part of a well-developed estate plan. You might want to turn to other legal vehicles to ensure that your estate and your family are adequately protected.
That analysis might even lead to the conclusion that you should begin gifting assets away prior to your passing, that way your loved ones can enjoy your wealth without delay and tax consequences.
What’s key is that you know your estate planning options and how to put the pieces together to develop the strong plan that you need and want.
If you’re not familiar with this area of the law, it can be intimidating. However, there are many resources available to assist you in getting started, and you can always seek assistance from an experienced professional.