When you have a loved one with special needs, you often have to think more carefully about their circumstances than you would for someone without those needs. The kind of special needs someone has, their age and the benefits they currently receive can all impact the best way to care for someone.
For example, a child with Down Syndrome who turns 18 may require a guardian who can oversee their medical, financial and legal matters if they aren’t capable of doing so for themselves. A young adult with autism may be able to live partially independently with the right support.
A child or sibling with special needs may require ongoing support even after someone dies, requiring careful estate planning to provide for those means. A special needs trust can be a valuable tool for those hoping to do right by loved ones with significant special needs.
A special needs trust can provide resources after you die
If your loved one with special needs is completely dependent on you for financial support, your death will mean that they could struggle in the future. Unfortunately, a lump-sum inheritance can cause a host of issues.
There could be tax obligations. Your family member with special needs may not understand the gravity of their inheritance and could waste it. They could also wind up targeted by unscrupulous people who want to manipulate them for their inheritance.
A special needs trust ensures that there are resources available on an ongoing basis as someone requires them. A trust can limit how much someone withdraws or what they use assets from the trust for. Trusts can reduce tax obligations for beneficiaries and can even help people continue to qualify for state benefits, like Medicaid.
A special needs trust could potentially promote independence right now
Some individuals with special needs are capable of living mostly independently, even if they can’t earn enough to support themselves or can’t manage their own finances. Setting up a special needs trust can be a way to supplement the assets available to your loved one with special needs without affecting their ability to qualify for state aid or making them feel as though they remain dependent on you.
Proper planning, careful funding and the right trustee can all make a special needs trust a valuable part of your estate plan.