Adding a special needs trust to an estate plan

On Behalf of | Dec 14, 2016 | Estate Planning

Many people in Nevada who plan their estates create a plan that will benefit their children. If a person has a child with a mental or physical disability, it may be especially important to create an estate plan for the benefit of the special needs child. For that reason, parents have the option of creating a financial document called a special needs trust.

One of the most common reasons that families set up a special needs trust is to ensure that an individual with special needs can receive their inheritance and still qualify for Medicaid. To receive government assistance like Medicaid, a person’s financial resources must remain low. By placing their child’s inheritance in a special needs trust, a parent can ensure that the child does not lose Medicaid services that he or she may need. The proceeds from the trust can help cover additional medical services not covered by Medicaid as well as living expenses.

Besides maintaining a person’s Medicaid eligibility, there are other reasons to create a special needs trust. This type of trust can ensure that a person always has their bills paid even if they are unable to manage their own money. Funds that are put into a special needs trust are tax deductible, and the funds are protected from collection attempts by creditors.

There are costs associated with a special needs trust that will be important to take into account. An estate planning attorney may be able to help a parent decide whether a special needs trust is the best way to provide for their child. If a parent decides to set one up, an attorney may help with trust planning tasks such as choosing a trustee.