Do you provide care for someone with special needs? Or want to leave a gift in your will or trust for someone on needs-based public benefits? A special needs trust can ensure that your gift benefits the person you love, without disqualifying them from the benefits they depend on for medical care and housing.
Needs-based benefits, which may include Medi-Cal, Medicare, Social Security, In Home Support Services, and many others, have strict limits on the amount and type of assets which beneficiaries may possess without disqualification. While these limits vary somewhat between benefits, the long and short of it is that even a very modest inheritance can cause quite a lot of problems for someone on needs-based public benefits. In some instances, the inheritance may not only disqualify the beneficiary from benefits, but end up going to the state or federal government rather than to your loved one. In others, the beneficiary will receive the inheritance, get disqualified from public benefits, and end up having to rapidly spend down the inheritance in order to cover their medical and living expenses, ending up back on public benefits with a lot of extra paperwork and no real improvement in their quality of life.
Planning ahead by creating a special needs trust can prevent all of these problems, and ensure that your gift benefits the person you love, as you intended. A special needs trust can be a part of your living trust or other estate plan, or it can stand alone.
You do not have to fund this trust now. In other words, you can set up the trust and have it ready to go when it’s needed, without placing substantial assets in the trust at this time. This allows you the flexibility to use your assets as needed while you are alive and competent, while planning for the care of your loved one. Once the trust is set up, other family members can incorporate it into their estate plans, ensuring that any gifts they leave to the beneficiary will also avoid problems with needs-based public benefits.
Setting up a special needs trust ahead before it’s needed can be simple and painless, and save a lot of time, trouble, and money down the road.
Not sure if your situation could benefit from a special needs trust? Just ask! As with all estate planning tools, special needs trusts are not for everyone, and you should consult with an attorney regarding your specific needs to find out whether a special needs trust could help you and your loved ones.