The importance of a special needs trust

On Behalf of | May 1, 2015 | Trusts

Nevada residents may wish to know about a specific issue that many parents face when leaving assets to their children. When the parent has a disabled child, care needs to be taken in estate planning to avoid unforeseen consequences.

Disabled Americans are often eligible for various government benefits that provide long-term care, including Supplemental Security Income and Medicaid. However, if the parent of a disabled child leaves them money in their will, this may end the child’s eligibility for these programs. This is the main reason for creating a special needs trust as part of a parent’s comprehensive estate plan. The parent gives the assets to the trust, keeping them separate from the estate. The trustee in charge of the trust then supplements the child’s disability benefits with funds from the trust.

An added benefit of this particular type of trust planning is that the funds are then shielded from creditors and others who may have a legal claim against estate funds. One common method of providing for a disabled child is to give extra funds to a sibling, with the understanding that those funds would be used for their disabled brother or sister. However, in a situation where that sibling owes money or goes through a divorce, these funds may be reached by another party. The special needs trust avoids this type of situation entirely.

When a person is looking to craft a complete estate plan, whether or not it involves a special needs trust, an attorney may be able to help. The attorney may be able to assess a client’s family and financial situation to determine the best way to secure assets for their beneficiaries. The attorney may then be helpful in drafting the appropriate documents and with trust administration.