The benefits of a special needs trust
Many senior citizens in America, including those here in the South Florida area, depend on government programs such as Supplemental Security Income and Medicaid for their benefits. Some of these residents may be physically or mentally disabled and unable to care for themselves and really need their coverage. But, what happens if this mentally disabled senior citizen comes into some monetary assets due to the death of another family member? In this kind of a situation, that senior citizen may not lose their government benefits if they are the beneficiary of a special needs trust.
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 will means that the family member 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 onto them.
Special needs trusts 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 the 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.
Special needs trusts provide tangible benefits for those who have disabled family members that need to be taken care of. Additional information on this type of trust can be found in the source to this blog or by seeking the advice of a legal professional who has extensive experience with this of estate planning.
Source: Findlaw.com. “Special needs trust FAQs.” March 31, 2015