Whether a person has a physical or mental disability, the need for financial support is often consistent. The cost of medical care, home healthcare, specialized equipment, housing, and everyday needs can quickly add up. If you have a family member with a disability, you may worry about his or her ability to cover these costs after you have passed away. A special needs trust is a trust used exactly for this purpose.
What is a Special Needs Trust?
A special needs trust is a fiduciary relationship involving a grantor, trustee, and beneficiary. The grantor, or person who creates the trust, adds funds to the trust and assigns a trustee to oversee the distribution of the funds. The funds are distributed to the disabled person who can use them to cover living expenses, medical needs, and any other costs that he or she encounters.
What makes a special needs trust different from other types of trusts is that trust assets are not counted against the disabled person when it comes to public assistance. Many disabled people receive Social Security or Medicaid to help them cover expenses. These programs are based on income. If your assets and income exceed a certain limit, you are ineligible for benefits. A special needs trust provides financial support to a disabled person without threatening their eligibility for public assistance. Because the trust assets are held by the trust and not the disabled person, the trust assets are not counted as income.
Who Should Use a Special Needs Trust?
Special needs trusts can be very useful estate planning tools for anybody who wants to provide financial assistance to a disabled person. You may wish to set up a special needs trust if you have a child with a severe disability who will require lifelong care. You may be providing financial support to the disabled child now, but what happens after you pass away?
Providing lump sum financial support through a will is typically not recommended for situations like this for a few reasons. First of all, receiving a lump sum of cash may make somebody ineligible for public assistance. Secondly, with this strategy, there is no way to ensure that the assets are used appropriately. When you set up a trust, you have the ability to describe how and when trust assets should be distributed.
Contact a Hyde Park Trust Lawyer
If you have a loved one with a disability, a special needs trust may be the right estate planning option for you. Our Roseland, IL estate planning lawyer can sit down with you and explore all of your options and help you choose the best course of action. Call [[title]] today at [[phone]] to schedule a free consultation.