Providing for your loved ones is a foundational part of estate planning. You want them to have financial security long after you’re gone. But deciding how to leave your legacy is just as important as determining what to leave (and to whom).
For family members with special needs, that question is even more complicated. Your loved one may rely on need-based public assistance – such as Supplemental Security Income (SSI) and Medicaid – which have strict income limits. By giving your loved one a gift or inheritance outright, you might disqualify them from these benefits, causing more harm than good.
A better way
Fortunately, you can still provide for a loved one with disabilities. A special needs trust is designed to fulfill this purpose. When properly set up, it can offer financial support without impacting your loved one’s eligibility for public benefits.
There are several ways to set up a special needs trust. One way is to create an individual trust, managed by a trustee of your choosing (which might be you). You can create this trust during your lifetime or establish it in your will to go into effect after your death.
Another option is a pooled special needs trusts. These trusts are managed by professional trustees on behalf of all beneficiaries, resulting in lower administrative burdens and prudent investment opportunities.
Choosing the right path
Crafting a special needs trust is a highly individualized process. So long as the trust complies with certain requirements to protect your loved one’s continued eligibility for public benefits, you have leeway in determining how to shape a meaningful legacy – and how to enhance your loved one’s quality of life.