A special needs trust (SNT) is a valuable tool for ensuring the financial security and well-being of a loved one with disabilities. It is an integral part of the estate plan for many families with dependents who have special needs.
If you care for someone who depends on you due to their disability, a special needs trusts can potentially provide a raft of assurances for your special needs dependent, helping to better ensure that they are well-catered for even after you are gone. Some of the reasons you should consider setting up a special needs trust include the following.
Preservation of essential public benefits
When you establish a special needs trust, assets held within it are not counted against the beneficiary’s eligibility for means-tested government benefits such as Supplemental Security Income (SSI) and Medicaid. This means that your loved one can continue to receive these critical benefits while still having access to additional funds for supplemental expenses. Without a special needs trust, inheriting assets or receiving a significant gift could result in the loss of eligibility for these vital benefits potentially leaving your dependent without essential support.
Long-term support
With a special needs trust in place, you can ensure that your loved one with disabilities receives ongoing financial support throughout their lifetime. The trust can be structured to provide for a wide range of needs including medical care, therapy, education, housing, transportation and recreational activities, without jeopardizing eligibility for government benefits. This long-term support offers peace of mind, knowing that your dependent will have the resources necessary to maintain their quality of life and independence well into the future even after you’re no longer able to provide care personally.
Helps avoid probate
Without a special needs trust, any assets left directly to a person with disabilities may be subject to probate upon the grantor’s passing. This can expose the inheritance to potential creditors, legal fees and delays in distribution. However, assets held within a special needs trust bypass the probate process, ensuring a smoother and more efficient transfer of wealth to the beneficiary.
If you are considering setting up a special needs trust, you may want to seek legal guidance to help ensure that the trust is properly drafted and administered in accordance with state and federal laws governing special needs planning. With this much at stake, it is an effort “worth doing right.”