You cannot begin Illinois estate planning too early. Designating beneficiaries, setting up trusts to help pay for college and ensuring a vacation home stays in the family can help your loved ones handle your passing with less stress and avoid significant taxes. If you have a disabled child or spouse, creating a particular type of trust can help ensure they remain eligible for government assistance after your death.
Kiplinger reports that trusts are invaluable planning tools, and proper structuring is a critical component of an effective tax planning strategy.
Testamentary special needs trust
Medicaid does not view the funds in this type of trust as an asset of the person applying for benefits. When the trust follows governmental guidelines, the assets in the TSNT are unavailable. Medicaid views funds in a revocable trust as available. A TSNT can leave assets that your spouse can use for services not covered by government programs.
Special needs trust
State and federal programs only cover the essential needs of those who qualify. A special needs trust lets you and other loved ones contribute funds to your disabled child. It also enables them to retain eligibility for means-tested programs, such as Security Supplemental Income and Medicaid. This type of trust can cover non-essential needs, such as dental and vision costs, as well as help retain certain lifestyle components.
When funding the trust, consider factors such as the nature of the disability and the required level of care. An experienced professional can help you determine the type of trust that can help you protect your estate with effective planning and tax strategies based on your unique needs and circumstances.