Don’t ignore government benefits when drafting a special needs trust

| Jun 4, 2021 | Estate Planning |

If someone you love has special needs, then they will probably require more support and financial resources than other members of your family. Creating a special needs trust can be a way to give yourself peace of mind because you know that your loved one will have access to certain assets and also the support of the trustee.

Choosing the right trustee is very important to maximizing the benefits of a special needs trust. The same is true of taking great care and how you structure the trust. Particularly if your loved one depends on benefits like Medicaid, you need to factor that program into the rules for the trust.

Limiting access to specific amounts is a common approach

You likely want the assets that you use to fund a special needs trust to remain available to your loved one for the rest of their life. Structured payouts that place a cap on the maximum amount someone can claim in a month or a year can ensure that the trust will continue to support your loved one for many years.

Making sure that those limits align with income and asset limitations for Medicaid and other state and federal benefit programs is also important. If your loved one receives too much too fast, they could lose their benefits not just for the year when they inherit those assets but also for multiple years afterward.

Planning state benefits when you create a special needs trust or revising an existing trust to integrate limitations based on government benefits can help you maximize the usefulness of your special needs trust.