The estate planning process is designed to create protections for the future. Depending on the needs and wishes of an individual, an estate plan can include various documents.
For some, setting up a trust is essential; however, not all trusts are the same. In situations where an individuals has a disabled child, setting up a special needs trust can be extremely beneficial for the child, ensuring they have the financial support they require.
Why is a special needs trust important? There are many reasons to have a special needs trust; however, the main reason is to provide financial support for a disabled child. By setting up a special needs trust, money can be set aside for the child without it impacting the child’s ability to obtain government benefits and utilize nonprofit support programs.
In some cases, trusts must be included when assessing income and available resources for those seeking certain benefits. This can then result in an individual having reduced or eliminated eligibility for certain government benefit programs such as Medicaid and Supplemental Security Income.
However, a special needs trust will be exempted as a resource if it is properly set up. This means that it must be limited to only one lifetime beneficiary, be irrevocable and it can only be used to pay for medical and dental care not paid for by other sources as well as costs associated with rehabilitation, education, transportation, assistance and other services.
Trusts can be complex, and everyone’s situation is unique when it comes to the need of setting up a trust. A special needs trust is both unique and complex, as it is specifically used as a strategy to ensure future financial support of a disabled child. Thus, it is important that one understand their rights and options when it comes to setting up a trust and ensuring that it is properly executed.