Special Needs Planning
Special Needs Planning is necessary if you have a child, sibling, niece or nephew, or some other beneficiary that is disabled and is receiving government benefits, or who is likely to receive these benefits in the future. These benefits may include SSI, and/or Medicaid, and/or SNAP. Leaving an outright inheritance to them can affect their ability to maintain or qualify for government benefits, making things more difficult for them rather than helping them. You need to be mindful of both assets and income, as too much cash, or too much income can negatively impact their eligibility for benefits.
There is a way to leave an inheritance to your beneficiary that will benefit your loved one. A Special Needs Trust, also called a Supplemental Needs Trust, could be the best way to help a loved one with a disability. By leaving money in this type of trust their inheritance would not effect their ability to continue to receive benefits. This way you can set money aside that will be protected for your loved one, and available to them for many of their needs.
If you have a disabled child that receives an inheritance from someone else or a settlement from a lawsuit then those funds can be used to fund a Special Needs Trust, while still allowing them to remain eligible for government assistance.
There are different types of Special Needs Trusts that can be established. There are very specific requirements for what the trust can and cannot say, so it is important to work with us to ensure it is drafted properly.
In establishing the trust, you will choose the trustee (manager of the trust), who will manage the money set aside for the disabled child/beneficiary, and ensure the long term success of the Special Needs Trust.
Deciding on the amount to leave a special needs beneficiary can be difficult, and something we can advise you on. Sometimes people want to make things simpler and just leave the inheritance to another sibling with the intent that it will be used for the person with the disability. There are many pitfalls to this, as it can disappear in the event of a divorce, lawsuit, bankruptcy, or perhaps even the mismanagement of the assets. For these reasons, we don’t recommend doing this. We would be happy to discuss some safer options with you.