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Benefits of a special needs trust

Depending on the detail of your life, an estate plan can take on a vastly different form when compared to the next person. Just like every person is unique, an estate plan can include many parts to address the current and growing needs of the testator. And for those with family members living with a disability, an estate plan could be designed to meet these current and future needs. A special needs trust could benefit an individual seeking or currently receiving disability benefits through a government program.

Because it is the policy of the federal and state government programs to only provide for the basic and essential needs of individuals living with disabilities, they are only supported to reach the poverty line or just below that. But what happens when family, interested parties and even settlements are calculated in? This could impact a person's ability to qualify for disability benefits.

This is where a special needs trust can come into play. This type of trust allows parents, family members and other interested parties contribute funds to the trust for the benefit of the disabled individual. By placing these funds in a special needs trust, this still enables the individual to receive means-tested benefits such as Medicaid and SSI benefits. Because these programs require an applicant to have no more than $2,000 in assets, the balance of the special needs trust will not impact this qualification.

Another benefit of a special needs trust is to protect a disabled individual from financial abuse. It also provides for oversight, ensuring that the funds in the trust are spent wisely. The funds in a special needs trust can cover the supplemental needs that Medicaid and SSI do not cover.

If you think a special needs trust might be beneficial for a family member, it is important to understand how to go about drafting one. This will ensure it is set up properly and can timely benefit a loved one.

Source: Cnbc.com, "How to set up a special needs trust," Mark Henricks, Oct. 25, 2017

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