Some people create trusts because they want to prevent their loved ones from fighting. Others hope to streamline their eligibility for benefits as they age or to protect their estates from taxes. In some cases, concerns about a beneficiary are what inspire the creation of a trust.
Parents and other family members of people with disabling medical conditions may create trusts to support those vulnerable people. Parents, grandparents and even successful siblings might establish special needs trusts to provide regular support for people who have medical challenges that prevent them from living a truly independent lifestyle. There are several key ways that a special needs trust can protect a beneficiary.
Providing continual financial support
People with disabling medical conditions often do not earn competitive wages. They may rely on the continued support of family members to afford basic cost-of-living expenses. A special needs trust with adequate funding and appropriate distribution rules can provide regular financial support for individuals who may not be able to command competitive wages.
Limiting the risk of financial abuse
Individuals with disabling medical conditions are vulnerable to the misconduct of others. There are some people who intentionally target people with cognitive deficits and other special needs in the hope of gaining access to their resources. Creating a degree of separation between the beneficiary with special needs and the resources allocated for their support can reduce the likelihood of financial abuse and fraud depriving them of their resources.
Connecting to the support of a trustee
A trustee can help manage the resources of a beneficiary with special needs. A trustee can control and invest inherited resources. They can manage financial obligations on behalf of the beneficiary and provide them with advice regarding living arrangements, medical care and other decisions that may require the use of trust resources.
In theory, a special needs trust can achieve all of these goals while simultaneously allowing a beneficiary to continue accessing certain state benefits. Properly structuring and funding a special needs trust can be a challenging undertaking. Those concerned about the well-being of a loved one with a disabling medical condition may need help establishing a trust for their benefit, and that’s okay.