Using Trusts To Preserve Access To Public Benefits

The idea of leaving behind a little something for our loved ones to remember us by is one of the things that makes the thinking-about-one’s-death part of estate planning tolerable. We all hope that the money or other assets we pass on will help our loved ones lead a better life. However, there are some people whose lives are made significantly worse when they are given assets after a loved one’s death – people with special needs.

This is not to say that people with special needs should be cut out of their loved one’s estate plans. Quite the contrary! Rather, special precautions need to be taken to ensure that someone with special needs who relies on public benefits like Supplemental Security Income (SSI) and Medicaid does not lose access to his or her benefits because he or she temporarily has too much money.

The best way to provide for a loved one with special needs without jeopardizing their benefits is by setting up a special needs, or supplemental needs, trust. These trusts are created with the special needs person as the beneficiary, but because the beneficiary has no control over how the trust will function, he or she is not considered the trust owner.

The trust’s activities are governed by the documents creating it. They must be drafted precisely to comply with the laws that allow for special needs trusts to operate in their unique manner, and they must also be carefully managed.

The funds in these trusts can be used to give people with special needs a better quality of life than they would have if they had to pay for all of their care out of pocket or rely on public benefits alone. For example, the trust can pay for medical care that is not covered by Medicaid, travel to appointments and to fun activities, and for fun activities themselves.

The peace of mind that these trusts provide to those who love someone with special needs is impossible to describe. Nobody likes to think about what will happen to their loved ones after they are gone, but it is especially painful to think about such things if your loved one needs special care and support. Setting up a special needs trust is the next best thing to being there to love on and care for someone you love yourself.