If you have a loved one with a disability and you want to ensure your estate is left to care for that person, you have to make a plan. If you do not have an estate plan which includes the care for your disabled loved one, there could be issues when it comes time for him or her to receive government benefits. You can do this through the use of a special needs trust. If you intend to leave your loved one with money, a special needs trust will be needed to prevent the loss of SSI and Medicaid benefits. Here are some things you need to know:
How Does a Special Needs Trust Help?
A special needs trust is essentially an entity for you to leave your estate to rather than directly to your loved one. You will choose a trustee who will have the discretion over how the money in the trust is spent on your loved one's behalf. Your loved one does not have any power over the money, so he or she will still be eligible for government benefits.
How Is Trust Money Spent?
The money has to be spent carefully. The trustee may not hand cash over to your loved one. This can cause issues with government benefit eligibility. However, the trustee can use the money to purchase the things and services your loved one needs. The trust is typically designed to pay for any out-of-pocket medical expenses not covered by Medicaid, education expenses, recreation, special vehicles, personal care attendants, daily necessities, and more. You have the right to set up the trust for the money to only be spent in certain ways to ensure the money stretches for as long as possible.
What If You Do Not Have a Trustee?
If you do not have a reliable trustee, you can opt for a pooled trust. A pooled trust is run by nonprofit organizations and are meant to help those with special needs. The money is pooled and invested from many families. Every beneficiary has his or her own account. The organization will select a trustee for your loved one who will spend the money on his or her needs. A pooled trust is also useful if you are not leaving a sizable amount of money and you do not want to set up a separate trust. You should be thoughtful when you plan for the future of your loved one with special needs. Be sure to speak to an estate planning attorney for more information.
For more information, contact companies like Life's Plan Inc.