If you’d like to financially support a family member who is physically or mentally disabled, but want to make sure he/she can still receive federal benefits like Social Security Disability Income (SSDI) or Supplemental Security Income (SSI), then a special needs trust is a must.
How A Special Needs Trust Works
This type of trust covers the percentage of the beneficiary’s needs that are not covered by government assistance payments. The assets in the trust typically do not count for public assistance qualification and proceeds are commonly allocated for medical expenses and caretaker costs among other qualified expenses.
Whoever creates the trust can designate a trustee to oversee it and assets provided by third parties (like parents) are not subject to Medicaid’s repayment rules.
As an additional note, these trusts can’t be accessed by winners of a lawsuit or creditors.
Benefits and Drawbacks of a Special Needs Trust
Perhaps the biggest stipulation – which could be a benefit or drawback depending on your perspective – is that money and assets put into this trust are used for very specific purposes. As the name states, disbursements are intended to go towards the care of the disabled individual and must be created before the individual turns 65.
If the disabled person needs long-term or sustained care, a special needs trust is a great way to ensure that resources will be available for a predetermined amount of time to sustain that person’s wellbeing.
Variations on Special Needs Trusts
These trusts come in two forms: third-party and first-party. The former is the most commonly used ones when planning in advance for the special needs of an individual. The latter is better used for an individual who inherits or receives money or property, or receives a court settlement. A trust can be created even if the person isn’t disabled yet and could be structured for future potential disabilities that arise.
If you’re looking to take care of and plan for the wellbeing of a disabled relative or loved one, a special needs trust is an excellent vehicle to set aside resources for their future. Call the estate planning team at The Law Offices of Rusty Williard today at (601) 824-9797 to learn more about how we’ve helped Jackson and Brandon families plan for their futures.