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Lombard estate planning attorneysBeing the parent of a physically or intellectually disabled child comes with a variety of special challenges. When your child struggles to adequately care for himself or herself due to a disability, you may worry about what will happen when you are not around to help him or her. It can be an uncomfortable reality to consider but making plans for the care of your disabled loved one for after you pass away will give you tremendous peace of mind. One option that many parents of disabled minor or adult children utilize is a special needs trust.

How Does a Special Needs Trust Work?

A trust is a financial instrument often used in estate planning that places assets under the authority of a trustee. In a special needs trust, the trustee is legally obligated to follow the directions contained in the trust and use the funds contained in the trust for the benefit of the disabled individual. The assets held in a special needs trust can be used to pay for your child’s home, living expenses, education, personal care attendant, out-of-pocket medical expenses, recreation, and more. One way to set up a special needs trust is to name yourself as the trustee and name another trusted individual, such as another one of your children, as a successor trustee. When you pass away, the successor trustee becomes responsible for using the assets in the trust for the benefit of your disabled child.

Assets in a Special Needs Trust Do Not Limit the Beneficiary’s Eligibility for Government Programs

You may be wondering why you cannot simply leave an inheritance to your disabled child through a standard will. Many government aid programs are only available to individuals if their property and income is below a certain level. If you leave funds or property of a substantial value to your child without a special needs trust, this could raise his or her income and available resources to a level which disqualifies him or her for these aid programs. When you leave assets in a special needs trust, the assets are not considered income or available resources so this does not limit your child’s eligibility for need-based government programs such as Supplemental Security Income (SSI) and Medicaid.

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Lombard estate planning attorneysHave you ever sat down with a member of your family and helped him or her apply for government-funded assistance programs? If so, you have probably seen firsthand that many of these programs have eligibility criteria that often include limits on income and owned assets. These requirements, in most cases, were established in order to ensure that those with the greatest need were served by these programs. However, the limits have also created unintended consequences for many people.

Such is often the case when an individual who receives benefits through Social Security, Medicaid, or other income-based programs is named as an heir in someone else’s will. It turns out that even a one-time transfer of property—which is generally what happens in inheritance situations—could have an effect on the heir’s eligibility to continue receiving benefits on which he or she may rely.

Understanding Government Aid Programs

Government assistance programs are virtually everywhere in today’s world, but many of them have been around for decades. Some even trace back to the “New Deal” measures of the 1930s, which were originally designed to help Americans who were most devastated by the Great Depression. As anyone who pays attention to politics can attest, government benefit programs are topics of constant debate and controversy, as legislators rarely agree on the future or the funding of such programs. Very few people, however, deny that these benefit sources are useful for those who are truly in need of medical care and financial help.

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Lombard estate planning attorneysWhen you consider what life will be like for your loved ones when you are not around to care for them, you may have serious concerns about family members who rely on you for the most care. You may have a child, a sibling, or even a cousin with a disability or other special needs. These needs may leave the person unable to adequately look after themselves. If you have been caring for a person with special needs, your death could lead to serious challenges for him or her, and your best option may be to create a special needs trust in the name of your loved one.

A Powerful Tool

Also known as a supplemental needs trust, a special needs trust is an instrument that places assets under the care of trustee to be utilized to help provide for a person with special needs. The most unique aspect of a special needs trust is that the funds contained in the trust are not considered to be “available assets” for the disabled individual, which means they cannot impact the person’s eligibility for Medicaid, Supplemental Security Income (SSI) and other income-based government programs.

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