Generally speaking, a special needs trust is created specifically for the benefit of a mentally ill or disabled beneficiary, such as a child or other loved one.
Since this person lacks the ability to manage his or her own finances, a trust is created with the idea that it can provide the person with direction in regards to his or her finances and other important life decisions.
Many people think that it’s okay to leave their assets to a disabled individual through a will. While this is an idea to consider, it does present a variety of challenges. For example, when a person acquires a large group of assets in a lump sum, it could disqualify him or her from receiving government benefits.
Some of these government benefits include Medicaid, Supplemental Security Income and subsidized housing. Through the use of a special needs trust, instead of nothing more than a will, you can avoid a situation in which your loved one is disqualified from receiving these benefits.
Upon your passing, the trustee that you name can purchase necessities for your loved one. Examples of this include personal care services, educational expenses and medical expenses.
If you’re concerned about what will happen to a disabled loved one after you pass on, it’s time to learn more about the benefits of a special needs trust. This isn’t the right choice for everyone in this position, but it’s an idea to consider. Once you know the legalities and how to setup a special needs trust, everything will begin to come together and you can decide which steps to take next.
Source: FindLaw, “Special Needs Trusts FAQ’s,” accessed Jan. 23, 2017