In the last couple of months, we have touched on a lot of topics pertaining to trusts. Today, we want to talk about one specific type of trust that can benefit many families: a special needs trust, or supplemental needs trust. If your child has a disability, planning your estate can be difficult. Obviously you want to leave parts of your estate for your child so that he or she will benefit from them — but what is the most effective way to do that?
A special needs trust can help immensely. This type of trust functions similarly to other trusts: your assets are placed in the trust, with a trustee managing and watching over the trust. Since the intent is for the assets to go to your special needs child, though, the trust will be administered in a more delicate manner.
This ensures that if your child is receiving government benefits or Medicaid, the execution of the trust won’t disqualify him or her from receiving those benefits. If your estate simple passed on inheritance to your son or daughter in a single lump sum, that income could disqualify them from receiving their benefits (which have income ceilings attached to them).
You can also pair a trust with life insurance to get the most out of your estate — and help your children live the best lives possible after you are gone. If you have any questions about these aspects to estate planning, please consult with an experienced estate planning attorney.
Source: Wall Street Journal, “Estate Planning When You Have a Special-Needs Child,” Henry E. Klosowski, March 27, 2016