In in general, trusts can be a beneficial component of an estate plan. A trust is an arrangement wherein property is managed for the benefit of another party. The party managing the property is referred to as the trustee and the party receiving the benefit is referred to as the beneficiary.
Trusts can sometimes seem complex but that doesn’t mean they are not important to understand. A special needs trust is a type of trust that can be helpful for those with mental disabilities or who otherwise lack the capacity to manage their own finances. A special needs trust can provide for the needs of a disabled beneficiary but it can also be important to construct the special needs trust so that the disabled individual does not lose any of the benefits they are receiving.
If assets are acquired by a disabled individual through a will, such as money left by parents, it may disqualify them for important benefits such as Supplemental Security Income (SSI), Medicaid, vocational rehabilitation or subsidized housing. Caring for them through a special needs trust will not produce the same outcome and will protect their benefits. The wording associated with a special needs trust is important which is why it can be helpful to have trained guidance during the process of setting one up.
A special needs trust can provide peace of mind for the estate planner to know that a disabled loved one will be cared for and that all of the benefits they need will be available to them. Trusts are an important resource that is sometimes less commonly understood than a will but offers a variety of benefits estate planners should be familiar with.