If you are considering setting up a special needs trust to help your loved one with a disability, there are some important things to consider. What most people do not understand is what is a special needs trust? In simple terms, a special needs trust can provide financial support for someone with a disability without jeopardizing their eligibility for government benefits like Medicaid and Supplemental Security Income (SSI).
There are a few special needs trusts, but the most common is the third-party special needs trust. This type of trust is funded by someone other than the beneficiary, such as a parent, grandparent, or other family members. The trustee has discretion over how the funds in the trust are to be used and can use them for things like extra medical care, therapy, education, housing, and other expenses not covered by government benefits.
When it comes to special needs planning, it involves much more than just setting up a trust. You will also need to consider other factors like who will serve as the trustee, how the trust will be funded, and what happens to the assets in the faith when the beneficiary dies.
If you are considering setting up a special needs trust for your loved one, here are some essential things to keep in mind:
- Choose the right trustee
The trustee is the person who will manage the trust and make sure that the assets in the trust are used for the benefit of the disabled person. It is crucial to choose someone you trust to manage the faith and be familiar with the unique needs of the disabled person.
- Make sure the trust is adequately funded
The trust must be adequately funded to be effective. You will need to transfer assets into the confidence to provide for the disabled person.
- Consider the tax implications
When you set up a trust, there may be some tax implications that you need to consider. It would help if you spoke to a tax advisor to make sure that you understand the consequences of setting up a trust.
- Get professional help
Setting up a trust can be complicated, so getting professional help from an attorney or financial advisor is essential. It will ensure that the trust is set up correctly and that all of your needs are met.
- Follow the rules
There are strict rules that must be followed when setting up a trust. Ensure that you understand all of the requirements before setting up the trust.
- Review the trust periodically
You should review the trust periodically to ensure that it is still meeting your needs. It is imperative if there are changes in your family or financial situation.
- Amend the trust as needed
If you need to make changes to the faith, you can do so by amending the trust document. It is a simple process that an attorney can do
- Terminate the trust when no longer needed
You can terminate the trust when the beneficiary dies or no longer needs the trust.
Special needs trusts can effectively provide financial support for your loved one with a disability. Keep these crucial things in mind when considering a special needs trust.