If you are an Indiana resident who has a loved one with special needs, you may hope to provide for his or her long-term maintenance after your death by bequeathing him or her with an inheritance in your will. While your heart is in the right place, this situation requires careful estate planning. According to FindLaw, people with disabilities may become ineligible for government benefits if they inherit assets in one large lump sum. A special needs trust avoids this problem by putting the inheritance in the hands of a trustee who manages your property for your loved one’s benefit.
Individuals with mental and/or physical disabilities can benefit from special needs trusts tailored to fit the unique lifestyle, specific needs and future considerations of each beneficiary. Otherwise, a special needs trust is similar to other types in that the trust lasts as long as it is necessary, either until the funds run out or the beneficiary dies, and a trustee manages and distributes the property to your beneficiary according to your specifications. If your intended beneficiary lacks the mental capacity to manage his or her own finances, the role of the trustee is particularly important.
Administrators of Medicaid, SSI and other government programs ignore assets held in trust when determining eligibility because it is not the beneficiary but the trustee who has control over the management of funds. However, you must be careful with the wording of the trust. In order for your beneficiary to retain government assistance program eligibility, the trust must clearly state that it is not for basic support but provides supplemental and extra care only.
When carefully crafted, a special needs trust can do what a will cannot in ensuring future financial security for a disabled loved one.
The information in this article is not intended as legal advice but provided for educational purposes only.