Can a special needs trust help your loved one with special needs?

On Behalf of | Apr 22, 2020 | Special Needs

People often think of trusts as a way for the very wealthy to pass on assets to their children without paying taxes. However, trusts can also serve as a way for family members to protect their vulnerable loved ones.

A special needs trust gives you the opportunity to provide financial protections for someone you love but without putting them at risk of misusing those funds, experiencing financial abuse or losing out on critical state benefits.

A properly funded and correctly structured special needs trust can improve the life of a special needs individual by augmenting their resources and providing a trustee to watch out for their best interests after you die.

Lump-sum inheritances can be dangerous for those with special needs

Most people receive all their inheritance at once, which can result in both unexpected stress and tax liabilities. For those with special needs, a lump-sum inheritance could wind up quickly wasted on unnecessary purchases. There is also the distinct possibility of people getting close to someone with special needs who has financial resources in order to manipulate them and take control of those assets.

Finally, a lump-sum inheritance will usually mean that someone with special needs can no longer qualify for Medicaid or other government programs that help them navigate the world. The creation of a trust eliminates the risks involved with a lump-sum inheritance.

You can restrict how much the beneficiary can access at one time or even what they use the funds to pay for, possibly by restricting the trust only for medical, educational and cost-of-living expenses. Finally, you name a trustee to manage the trust, which ensures that there is oversight and support for your special needs loved one as they adjust to a world without you there to provide care for them.