Estate planning is important for everyone who wants to ensure that their wishes are carried out after they die or if they become incapacitated. However, if you are the parent or guardian of someone with special needs, it's particularly crucial to make sure that your loved one is taken care of when you're no longer able to do so.
That's where a special needs trust comes in. It has to be set up correctly, however, to make sure that your loved one is still able to qualify for government benefits such as Medicaid and SSI.
Since there's a limit to the amount of assets a person can have to receive these benefits, a special needs trust must be set up and administered in such a way that the beneficiary doesn't actually own the assets in it, but that they are managed on the beneficiary's behalf. It's important that beneficiaries of a special trust still qualify for these government benefits, since they can go a long way to giving them the care and treatment they need.
The money in the trust, however, can pay for expenses not covered by SSI and Medicaid. These include clothing, education and extras.
Just as important as setting up the trust correctly is choosing the right trustee. If the trustee makes an innocent mistake, the beneficiary could lose some of his or her government benefits. Of course, you also want to make sure to choose someone whom you can trust. However, such a responsibility can be daunting for a family member. Some financial experts recommend hiring a professional trustee who knows how to properly handle a special needs trust.
If you're caring for someone with special needs, it's essential to get sound advice from a financial planner and an attorney who has experience with special needs trusts. They can help to ensure that your loved one gets the care and quality of life he or she deserves even when you're no longer around to do that.
Source: CNBC, "Setting up a special needs trust? Get the expert help your loved one deserves," Sarah O'Brien, accessed July 26, 2017