Are you looking to leave assets to a disabled relative? The wisest way to do this is through a special needs trust, which preserves the individual’s eligibility for government assistance programs like Medicaid and Supplementary Security Income (SSI). However, the benefits of a special needs trust reach beyond securing government payments.
A Special Needs Trust Improves the Beneficiary’s Quality of Life
Special needs trusts are crucial for those who cannot handle finances independently and are the most secure way to provide supplementary income. Medicaid and SSI only cover shelter, food and medical care, so the trust can cover the rest. Thus, the trust enhances your relative’s quality of life by maximizing the resources at their disposal.
What Is a Special Needs Trust?
A special needs trust is irrevocable and created for people who will need government assistance for the rest of their lives due to a permanent, severely disabling condition.
The trust “owns” the assets, not the beneficiary. Therefore, the Social Security Administration does not include special needs trust assets as income. Furthermore, you appoint a trustee to administer the assets when you create the trust.
Additional Advantages of Establishing a Special Needs Trust
For families with disabled children or adults, this trust can play a significant role in their financial planning. Below are several compelling reasons to consult with attorney Robert Turner about establishing a special needs trust (besides keeping your relative eligible for government benefits).
- The trust’s expenses are tax-deductible.
- You can fund the special needs trust as you wish (with cash or other resources).
- It ensures the assets will be used solely for the beneficiary’s care. For example, the individual will not lose the funds to creditors or be taken advantage of in money-related matters.
- Others can contribute to the trust. Those wishing to help can make annual gifts to the special needs trust for up to $15,000 per person without triggering the gift or generation-skipping tax.
- Future trustees can use the trust’s data to determine distributions. Using the special needs trust like a checking account, a new trustee can analyze the records to decide appropriate payouts.
- You can use the trust to maximize injury settlement gains. For example, if your relative wins a large settlement, you can direct the payout to a self-settled special needs trust. Like this, the beneficiary can still qualify for government benefits while receiving lifelong payments.
The Best Way to Establish a Special Needs Trust is with an Attorney
Choosing how to handle your loved one’s financial future does not have to be complicated. Call Robert Turner or visit our law office in Decatur, Georgia, for more information.
Posted on behalf of Turner Law, LLC