Most people, when planning their estates, think about what kind of legacy they want to leave for their loved ones. But for families who have loved ones with special needs, this goal takes on an added importance.
If you have an adult child or other loved one who is disabled, you want to make sure they have all the resources they need to carry on long after you are gone. At the same time, you have to be careful that their inheritance does not financially disqualify them from receiving the benefits they need. These two goals can work against each other.
Special needs trusts
Perhaps the best way around this problem is by using a specific type of estate planning tool known as a special needs trust.
When you place assets into a special needs trust, you appoint a trustee to manage the assets and name your loved one as the beneficiary. The trustee disburses the assets to your loved one according to the instructions in your trust documents.
The biggest factor that makes a special needs trust different from other trusts is that the trustee must disburse the assets in a way that does not put the beneficiary financially ineligible for benefits they need, such as Social Security Disability Insurance or Medicaid benefits. These and other programs are meant for people who are unable to earn an income, and so if a recipient starts collecting income over a certain amount, they become ineligible for the benefits.
Pennsylvania law has a number of regulations and rules that are unique to special needs trusts. This type of estate planning tool requires careful work and attention, and should be handled by experienced professionals. When prepared correctly, it can be a great way to make sure your loved ones have the care and resources they need for the rest of their lives.
