If you are going through the estate-planning process, you know there are many issues to consider. Not only must you ensure that you plan for your future, but you likely want to protect those who mean the most to you. Creating a special needs trust may be an effective way to accomplish both objectives.
Typically, individuals establish special needs trusts to protect the quality of life for loved ones with disabilities. These trusts cover expenses that needs-based programs do not, without jeopardizing the beneficiary’s eligibility for government assistance.
Here are three less common reasons why you may want to create a special needs trust.
Facilitating money management
Even if a relative or friend has no basis for applying for need-based assistance, a special needs trust may help him or her better manage money.
With a special needs trust, a trustee oversees expenditures. Before writing a check, the trustee reviews the expenditure. If the expense does not satisfy certain requirements, the trustee has the option of rejecting it. This, of course, may help safeguard the beneficiary’s wealth.
Anticipating future needs
Some medical conditions worsen over time. Even if your loved one can manage his or her finances successfully currently, that ability may diminish in the future.
By setting up a special needs trust, you ensure that your relative has the financial assistance he or she needs to cope with a progressive mental or physical condition.
Protecting financial resources
If your loved one requires care, you may worry about an unscrupulous caregiver gaining too much control. For example, if your loved one has in-home care, his or her assistant may pay bills. Eventually, though, the assistant may have an incentive to misappropriate funds. The special needs trustee can protect financial resources by overseeing expenditures.
While using a special needs trust to supplement a disabled person’s quality of life without harming his or her eligibility for government assistance is common, you may want to consider the other benefits of this type of trust. Put simply, if your loved one has unique financial concerns, creating a special needs trust may be the right course of action.
