When you have a family member with special needs, it is important to understand that your estate planning strategy is unique and requires the assistance of an attorney experienced in creating Special Needs Trusts. If an inheritance is left directly to your family member with special needs, it could result in the loss of essential government benefits that assist with the cost of his or her care.
Will not disqualify your loved one from government benefits
A Special Needs Trust permits an individual that is 65 years or younger to receive certain resources beyond what is supplied by Medicaid without making him or her ineligible to receive the government benefits.
A Special Needs Trust can be created while you are living or, you can create a will or a revocable living trust that establishes a Special Needs Trust at your death and transfers funds into the trust when you die.
Pays for costs not covered by government benefits
Either way, a Special Needs Trust can provide a disabled dependent with the ability to pay for the care and services that are not covered by government benefits. This includes things such as therapies, special equipment, education, travel costs associated with medical appointments, and other similar costs that are not covered by Medicaid.
When the government determines whether or not your loved one qualifies for benefits, the assets held in a Special Needs Trust are not considered because the funds held in the trust are not readily available to the beneficiary. The distributions from a Special Needs Trust are made on a discretionary basis.
Can offer incentives
A Special Needs Trust could also be used to create financial incentives to ensure your loved one continues to be cared for the way you want after you are gone. For example, it's possible to have built provisions into Special Needs Trusts that provide for cash payments to a guardian who takes the family member with special needs out of the house to movies and meals, for example, in the same way the parents did while they were living.
Can ensure sufficient funds for a lifetime
Finally, it is also important to consider how to ensure that the trust has sufficient funds throughout the life of the individual with special needs. One method that is commonly used is to name the Special Needs Trust as the beneficiary of the parent’s (or other relatives) life insurance policies. You will also want to ensure that the trust assets are wisely invested so the funds continue to accumulate and grow. Family members and friends should also be encouraged to make donations or gifts to the trust and/or to include it as a beneficiary in their will or life insurance policy.
This article is a service of the Law Office of Keoni Souza, LLC, an estate planning law firm in Honolulu, Hawaii. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by contacting our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.
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