If you have a loved one with special needs, you should tailor your estate plans to protect their interests. Leaving them their share of your estate through a will, or in the hands of their siblings may not be the best way to go about it. A lot could go wrong, such as mismanagement or outright neglect.
In such a case, you ought to explore other ways of securing their future. Having a special needs trust as part of your estate plans can help you achieve this. Here is how it works.
Special needs trusts explained
A special needs trust is a special kind of trust that allows the beneficiary to benefit from its proceeds while still retaining eligibility for government aid programs such as Medicaid.
Unlike a will that transfers ownership of assets to the beneficiary, which may disqualify them from these programs, assets in a trust do not belong to your loved one. As such, these assets are not included as part of your loved one’s estate when determining eligibility.
In addition, the assets in the trust will be managed on your loved one’s behalf by a third party, referred to as the trustee. The trustee is legally obligated to act in the best interests of the beneficiary, and the trust should last through your loved one’s lifetime.
Special needs trusts are complex
Setting up and properly funding a special needs trust involves legal technicalities that you need to get right. If you fail to meet the requirements, the trust may be voided, leaving your loved one in the cold.
You should strongly consider reaching out to an expert for assistance in drafting the trust and sealing loopholes that might get in the way of things when you are no longer around.