Are there advantages to creating a special needs trust?
Many senior citizens in the nation depend on the benefits provided by government programs such as Supplemental Security Income and Medicaid. Some really need it because they may be physically or mentally disabled and unable to care for themselves. But what happens if a disabled senior citizen receives some monetary assets due to the death of another family member? Is there any type of estate planning tool that can offer advantages for this type of person?
In situations like this, a special needs trust can provide the necessary benefits. Special needs trusts are designed to take care of someone who is either physically or mentally unable to take care of themselves. Trusts of this type are also used to make sure that the beneficiary does not lose the government benefits they are currently receiving. Leaving money to a disabled family member with a traditional trust can mean that the person in question will lose their benefits since they now have acquired assets. These assets in the will would then be used to care for them until they run out. Afterwards, the family member would have to re-apply for those government programs they were initially receiving.
But by using a special needs trust, this type of situation can be avoided. Since the trustee of the program controls all of the assets in the trust and the disabled beneficiary does not, federal programs like Medicaid cannot consider these assets as the beneficiary’s. The disabled family member is allowed to hold on to them.
Special needs trust also cover many other types of situations including the proceeds from the settlement of a lawsuit. If the disabled family member was part of a successful lawsuit, then the benefits from that legal action can be placed in the special needs trust for that individual. And if that family member is later sued, those benefits, once they are part of the special needs trust, cannot be part of any settlement.
A special needs trust should always include language that indicates that it is to be used for supplemental care for the designated individual. However, any Florida resident who is considering developing a special needs trust may want to speak to an estate planning attorney in order learn about additional benefits to this type of estate planning tool.
Source: estate.findlaw.com, “Special needs trusts FAQ’s“, Accessed September 12, 2016