A Brief Guide to Special Needs Trusts

 Posted on January 28, 2015 in Estate Planning

Anyone with special needs or disabled relatives wants to do everything they can to ensure the most comfortable and opportunistic future. Setting up a trust is one way to accomplish this. A trust is an agreement in which a third party, known as the trustee, holds assets for the beneficiary.

Setting up a trust for beneficiaries with disabilities can be challenging. While it is true that creating a special needs trust can be more involved than setting up a traditional one, these trusts can help provide for the needs of loved ones. The first step in deciding if a setting up a trust is a smart option is to understand how special needs trusts operate.

The laws that relate to special needs trusts are complex and often confusing. As the World Institute on Disability reports, disabled people cannot legally have a trust for themselves. However, this does not mean they will be excluded from an inheritance.

Instead of being a direct beneficiary, a disabled family member will receive what is commonly known as a "supplemental care trust." This system works to ensure that inheritance money does not directly interfere with any government benefits, namely Supplemental Security Income and Medicaid.

Supplemental care trusts require the appointment of a trustee to manage the money for the intended beneficiary. Not only does this avoid any chance of wrongfully disqualifying one for SSI and Medicaid, but it also helps ensure responsible management of the beneficiary's money.

It is important to understand, however, that there are times when a special needs beneficiary may no longer qualify for government assistance. A variety of factors, including the type of disability, the amount of government assistance they are currently receiving, and how much they are likely to inherit will factor into this decision.

If you are interested in setting up a supplemental care trust, a Wheaton special needs trust lawyer may be able to help. At the Illinois law office of Stock, Carlson & Asso. LLC., our clients' needs are our top priority. Contact us today at 630-665-2500 to schedule a consultation.