Protect your family with a special needs trust

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Protect your family with a special needs trust

If you have disabled relatives, you may worry about their ability to support themselves financially. After all, many types of physical, mental and emotional disabilities make finding and keeping gainful employment virtually impossible.

Your disabled family members may qualify for means-tested public programs, like Medicaid or Supplemental Security Income. Unfortunately, using your estate plan to give cash or other assets directly to your disabled relatives may make them ineligible for government help. Establishing a special needs trust may be the solution.

What is a special needs trust?

A special needs trust is a trust that supplements government benefits. Provided your disabled relatives do not use funds from the trust on the same expenses public financial assistance covers, they may use the trust to improve the quality of their lives.

What expenses are supplemental?

Government programs usually provide minimal funds to use on housing, food, utilities, medical care and other basic expenses. Any other expenses are likely to be supplemental. For example, your disabled loved ones may use funds from the trust for out-of-pocket medical care, educational expenses, travel costs or similar expenditures.

Is there any oversight?

Losing needs-based government funds is likely to be catastrophic to your relatives, so you do not want them to inadvertently misuse the special needs trust. Fortunately, that is not usually much of a concern.

When you form a special needs trust, you choose a trustee to provide important oversight. Part of this oversight responsibility is approving trust disbursements only after concluding they are acceptable under the rules of the government program.