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Is a special needs trust right for your estate plan?

On Behalf of | May 4, 2022 | Firm News |

A lot of people who research estate planning are daunted by their options. This is usually because the individual hasn’t really thought about what they want out of the process, or they are completely overwhelmed by the choices to be made.

If you’re going down the estate planning path, start focusing on what you want out of the process. Carefully think about what you want for your assets and your loved ones. This may include finding a way to ensure that a loved one with special medical needs is adequately taken care of when the time comes.

How a special needs trust may help your loved one

If caring for a loved one with medical needs is a priority in your estate plan, you may want to consider a special needs trust. Here, you put assets in a trust that is then used to support a named beneficiary. The difference between this trust and other trust types is that payments made from a special needs trust to a named beneficiary don’t count as income for government program eligibility determinations.

In other words, a special needs trust is a way to financially support your loved one without affecting their ability to qualify for Medicaid. This is a great way, then, to ensure that your assets aren’t eaten up by expensive medical care.

What restrictions are placed on a special needs trust?

Of course, in order for assets from a special needs trust to not count as income, your beneficiary has to use the trusts in a certain way. Don’t worry, though. The list of acceptable uses for special needs trust assets is extensive, including each of the following:

  • Medical expenses not covered by Medicaid
  • Medically necessary equipment, such as a wheelchair
  • Rehabilitation services
  • Education and training
  • Travel expenses
  • Recreation
  • Entertainment
  • Furniture
  • Appliances
  • A car
  • Vacation
  • Rent or mortgage

As you can see, there’s a lot of leeway in how special needs trust assets can be used, which is why this estate planning tool is so great for so many people. But don’t let this extensive list leave you thinking that the trustee and the beneficiary can do whatever they want to do with the trust’s assets.

Misuse, after all, may jeopardize your loved one’s medical care and their financial stability in both the short-term and the long-term. Therefore, you need to ensure that the terms of your special needs trust are clear and that your named trustee has a complete understanding of the requirements that they need to meet when releasing trust assets.

Creating your special needs trust 

If you think that a special needs trust may be right for you and your loved one, you need to ensure that you create the proper documentation with care. After all, you don’t want anyone to raise questions about the legal validity of the document, and you don’t want your loved one to be without the support that you intended because of a seemingly minor mistake.

That’s why you may want to consider discussing your wishes with an attorney who knows the ins and outs of estate planning. By doing so, you can ensure that you make the fully informed decisions that are right for you, your estate and your loved ones. So, if you’d like to learn more about what a law firm like ours has to offer, please continue to browse our website.