Parents want the best for their children. Whenever they make any decision involving their sons or daughters, they carefully look for options that will benefit their children the most. This also applies to planning for the future. In estate planning, parents consider creating a special needs trust for their children with disability.
If you are considering creating a special needs trust for your child, here are some benefits you should know about.
Retention of government benefits
The main feature of a special needs trust is that it allows the beneficiary to receive financial support without affecting their eligibility to receive government benefit awards, such as Medicaid or Social Security Disability Insurance (SSDI). The trust acts as a supplement and the trustor should create this to cover expenses outside government assistance coverage. The funds may be in the form of cash, real or personal property, settlement awards or life insurance proceeds, among others.
Free from claims
A special needs trust must be irrevocable. As such, it can no longer be subject to modification. Since the trustor transferred the assets to the trust, they are no longer part of the trustor’s estate. Therefore, creditors cannot go after the trust’s assets for the trustor’s debts, nor can a lawsuit winner seize the same.
Priority is the beneficiary’s best interest
Another attractive benefit of a special needs trust is that the parents or the person who establishes the trust can choose a specific person as the trustee to manage the trust. Assigning someone the parents trust can assure them that the trustee will act in the beneficiary’s best interest.
Understanding available tools, such as a special needs trust, helps parents navigate the complex process of estate planning. Having a comprehensive estate plan that will protect your loved ones in case something happens to you is a great way of thinking ahead.