Estate planning is an important process to detail your wishes for the distribution of your assets after your death. If you have a loved one with special needs, your estate planning approach requires greater consideration.
A special needs trust provides a customizable estate planning solution for these situations.
The purpose of a special needs trust
A special needs trust provides financial support for individuals with disabilities without jeopardizing their eligibility for government benefits, including Supplemental Security Income and Medicaid. These benefits typically have strict limits for income and asset values. A traditional trust could disqualify a beneficiary from eligibility for these resources.
How a special needs trust differs from typical trusts
The primary difference between a special needs trust and a typical trust lies in the distribution and management of the assets. In a standard trust, the beneficiary has direct access to the funds and can use them as they see fit. Conversely, in a special needs trust, a trustee manages the assets and distributes them on behalf of the beneficiary, ensuring that the funds enhance their quality of life without interfering with their government benefits.
Special needs trusts also offer flexibility in the use of those funds. The trustee can allocate resources for various purposes, such as medical expenses not covered by insurance, therapy, education, housing and recreational activities. This flexibility allows the trust to adapt to the changing needs of the beneficiary over time.
Remember, every individual’s circumstances are different, so you should always tailor your estate plan to meet the specific needs of your beneficiaries. By understanding the unique characteristics of this type of trust, you can make informed decisions when planning your estate.