Dependents with permanent disabilities and special needs often qualify for government support such as medical insurance and financial assistance. However, coming into a large sum of money from an inheritance might jeopardize this funding.
Knowing when to consider a special needs trust may protect dependents’ rights to inheritances while continuing to allow them to receive qualifying support programs.
What are special needs trusts?
Trusts allow parents to set aside money and assets for their dependents to have after the parents’ deaths. Special needs trusts are unique because parents can delegate funds to support adult dependents with permanent disabilities without the money impacting government aid determinations.
Who manages special needs trusts?
Third-party trustees often manage special needs trusts. These arrangements put trustees in control of the trust’s property instead of the dependents. The grantors delegate how the trustees use the property to support the dependents. Since the dependents do not own the property, the trusts should not affect their ability to collect government assistance.
How can trustees use funds in special-needs trusts?
Special needs and disabled adults often require life-long care, and special needs trusts allow responsible parties to continue providing this care after their death. Some things trustees may use the funds for are:
- medical care not covered by insurance
- housing needs, such as new furniture
- Assistive equipment not provided by insurance
- Outings that support social and emotional well-being
The grantors should consider their dependants’ unique needs when deligating how trustees can use funds.
When parents have adult children with special needs or permanent disabilities, special needs trusts are one way to provide financial support after the parent’s death.