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3 benefits of a special needs trust

Special needs trusts are those that are created and managed for the benefit of someone who has special needs. Typically, beneficiaries are mentally challenged or disabled in some way, making it difficult or impossible for them to manage the assets themselves. Special needs trusts can be a way to ensure those with these needs is cared for, even if you are no longer able to assist them yourself.

One benefit of a special needs trust is that it provides peace of mind for caregivers. Whether you're a parent or a relative with an interest in the beneficiary, a trust lets you set aside assets or funds to provide for that person's care in the future. If something happens to you, the person you elect as trustee takes over the assets and uses them in accordance with the trust rules to provide care, shelter, education or medical provision for the individual in question.

Another benefit of such trusts is that they can ensure that someone remains eligible for government assistance programs even if you leave money or assets for their future use. For example, if a disabled person is getting Social Security Disability Insurance benefits and you leave them $10,000 in cash, you could put their benefits at risk. Since $10,000 isn't going to cover them for life, they will need those benefits. Putting the money in a trust means the person doesn't get it as income, so their benefits aren't at risk and the money you leave can be used over time to assist them.

Finally, a special needs trust lets you ensure funds are there when the person needs them. Leaving the money outright to someone who is mentally unable to managed it could mean they don't have the assets when they most need them. If you want to provide for someone via a special needs trust, consider talking to an estate planning lawyer about your options.

Source: FindLaw, "Special Needs Trusts FAQ's," accessed March 17, 2017

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