Most adults have a relatively easy time planning their estates. The biggest concerns will be preventing family conflict and ensuring their beneficiary designations match on all of the paperwork. They choose who they want to inherit certain property and enact protections for their golden years, like powers of attorney.
For some families, estate planning will require more attention to detail. If you have a loved one with special needs, like a child with autism or Down syndrome, their unique medical and social support needs will make estate planning a bit more complex.
For many young adults with significant medical issues, independent living may not be a realistic goal. Instead, they will forever depend on the support and guidance of family members. A special needs trust could be the tool your family needs to protect your vulnerable loved one in the future.
What is a special needs trust?
Like any other trust, a special needs trust is a legal entity that you create to hold property and achieve certain goals. A special needs trust specifically exists to support and protect someone who might not be able to manage an inheritance on their own.
You can fund a special needs trust with property ranging from life insurance and real estate to financial accounts, and then you create rules for when your loved one with special needs can access or use those assets.
Why are special needs trusts so popular?
There are several reasons that special needs trusts have become so widely used by families. Perhaps the most important benefit is how the trust can improve someone’s standard of life and financial stability without eliminating their eligibility for state benefits, like Medicaid.
A trust also helps diminish the negative consequences of an inheritance. Many individuals struggle with managing a lump-sum inheritance, especially when they have special needs. Additionally, an inheritance might put vulnerable adults at increased risk of abuse by caregivers.
When you create and fund a special needs trust, you plan for the future needs of your child while limiting the risks of hardship or mistreatment they face. Learning more about special needs trusts and other estate planning tools can help you create an estate plan that truly works for your family.