Gathering the courage and motivation to engage in estate planning can be quite an ordeal in and of itself. However, the process can be much more difficult to tackle if you have unique circumstances that must be addressed. One such issue is when an heir is one who has special needs. Typically, this person is a child of an estate planner, so those engaging in estate planning want to make sure they are taking the proper steps to ensure their child is adequately cared for once they pass.
This can be of particular importance to those heirs who are receiving some sort of state or federal assistance. Oftentimes, the receipt of these benefits is dependent upon meeting certain federal requirements, many of which are based on one’s assets and income. Therefore, those individuals with special needs who are set to inherit a significant estate could be at risk of losing the benefits they rely on to get by, such as Medicaid, SSI benefits and even SNAP benefits.
So what can parents do to ensure their children are able to retain their much needed benefits while at the same time inherit their estate? One highly effective way of doing this is by creating a supplemental needs trust. The assets that are put into this trust are exempt from income determinations, meaning that they will not be taken into consideration when assessing whether one qualifies for the government benefits discussed above. The funds from such a trust can be used to cover just about anything else that is not covered by federal benefits, which makes it quite advantageous.
It is important to fully understand the supplemental needs trust before deciding to create one, though. For example, this type of trust can only benefit one individual for life, and a number of legal terms must be included. Before creating one of these trusts, it may be beneficial to discuss the potential benefits and drawbacks with an experienced estate planning attorney who may be able to help craft an estate plan that meets one’s needs. This information can help ensure you consider all your present and future needs and concerns.