To protect your child's needs in the future, you might have to rely on a special needs trust. The trust will provide special protections that could potentially ensure your child remains eligible to receive government benefits, such as Medicaid. If you have a child with special needs and are planning for his or her future, here is what you need to know about a special needs trust.
What Are the Benefits of a Special Needs Trust?
When you leave an inheritance to your child, those assets could be considered by the government when assessing your child's eligibility for government benefits. Unless your estate has the funding to supply future needs, such as assisted living or nursing care, your child could be left without the benefits that could help supply those.
A special needs trust can help. Instead of your child's inheritance going directly to him or her, the assets would go to the trust. In the eyes of the government, the assets belong to the trust and not your child, which means he or she would still be eligible for government benefits.
The trust also allows friends and family to contribute to the care of your child without it having an impact on his or her benefits. As a result, you never have to worry that your child's needs will not be met after you have passed away.
Are There Limitations to the Trust?
Even though the government does not consider the trust assets as being your child's, there are limitations in place as to how the funds are used since it is labeled a special needs trust. For instance, the funds can only be used to meet the needs of the child. Transportation, rehabilitation, and home health care would be some of those needs that the trust can cover.
The rules regarding how the assets can be used can vary by state. Before establishing the trust, take the time to review your state's rules. For instance, some states allow for the trust to be used for food and housing, while some do not.
Another potential issue with the trust is that some states have limits on who can serve as trustee. If you live in a state in which the parents are not allowed to manage the trust, you need to understand that any assets that are put in the trust prior to your death are only accessible to the trustee that you select.
Before establishing the special needs trust, consult with an experienced trust lawyer like those at Wright Law Offices, PLLC who can help you understand the ins and outs of your state's laws and the trust.Share
6 February 2017
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