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What does a special needs trust do?

On Behalf of | Feb 27, 2023 | Elder Law & Estate Planning

If you have a family member who has a disability, you might worry about his or her ability to work as an adult. Fortunately, according to the U.S. Census Bureau, there is a social safety net that provides benefits to many individuals who cannot support themselves financially. The benefits from this safety net, though, are often quite meager.

Meager benefits are still valuable to those who cannot work, of course. Still, before awarding benefits, many public programs consider the assets and income of prospective beneficiaries. If you give cash or other assets to your relative, you might accidentally make him or her ineligible for ongoing assistance.

Preserving public benefits

A special needs trust is an important estate planning tool, as it gives your loved one access to additional money without endangering his or her public benefits. That is, because the special needs trust holds funds for your relative’s benefit, it does not count as income for purposes of qualifying for public assistance.

Using the special needs trust

It is important for your loved one not to use funds in the special needs trust on the same expenses that public benefits traditionally pay for. This means disbursements from the trust probably cannot go to housing, food, utilities and basic medical care.

Still, the trust can cover many other expenses, including the following:

  • Home improvements, renovations and modifications
  • Travel
  • Education, training, books and magazines
  • Recreation, hobbies and electronic devices
  • Uncovered medical care

Ultimately, if you are looking for a way to support your loved one without endangering his or her public benefits, setting up a special needs trust can vastly improve his or her quality of life.

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