Why should I consider a special needs trust?

On Behalf of | Nov 21, 2016 | Trusts

A recent study by the Centers for Disease Control and Prevention reported that about one in five adults has some type of incapacitating disability. Some may have profound impediments and others less severe.

Many of those 53 million people with disabilities receive government benefits that help them with medical costs, which total over $400 billion nationwide each year. If you have a child or other dependent with a disability, you may rely on that assistance for your loved one’s basic medical care. You also know the delicate financial balance you must keep to avoid losing those benefits.

You’re probably always thinking about the future or asking yourself questions like these:

  • What will happen to my special needs child when I am gone?
  • How can I provide for him or her both now and in the future?
  • What can I leave behind that won’t disqualify my loved one from the government benefits he or she needs?

Medicaid and supplemental security income are available for people who have less than $2,000 in assets. The state of Nevada also offers assistance programs for those with special needs and limited assets. That’s why anything you leave behind for your disabled loved one cannot exceed that amount.

Protecting and providing for your loved one

Placing your assets into a special needs trust will allow you to provide for his or her care without risking those essential benefits. The assets would be owned by the trust, not the beneficiary, and the trust manages them according to your instructions.

As the parent or caregiver of someone with special needs, you know that medical costs are only part of the financial worries associated with disabilities. Often people with disabilities require:

  • Enhanced education
  • Clothing
  • Travel
  • Caregivers
  • Medical services not covered by Medicaid

A trust can be set up to provide these things and many more without jeopardizing your loved one’s eligibility for government assistance.

Why do I need an attorney to set up my trust?

A trust is a complex document that must be created carefully to avoid negative ramifications. For example, life insurance, IRAs and other retirement funds may carry tax penalties for your loved one if they are not set up correctly. In addition, an attorney who has experience with the administration of complicated trusts can relieve your family of the burden of management tasks, such as distributing funds and dealing with tax issues.

An attorney preparing your trust will protect your loved one from losing those benefits that are essential for his or her medical care. Most importantly, you want to be sure the wording and administration of the special needs trust will always provide whatever services or essentials your loved one requires when you are no longer able to care for him or her. A compassionate attorney with skill in preparing and administering trusts can offer that peace of mind.