If you have a loved one with special needs, you may be worried about their future once you are gone. Will they be financially secure? Who will take care of their bills and ensure they live comfortably? These are some of the many questions you may have, especially when making your estate plans.
However, there is a viable solution in the name of special needs trusts. Broadly speaking, consider having their portion of the estate under a special kind of trust that manages it on their behalf. There are two main types of special needs trusts, as outlined below.
First-party special needs trusts
Suppose your loved one received a lump sum payment following a personal injury or they own property either from a divorce or inheritance. These property and assets can be moved to a trust, meaning they do not directly own them but are beneficiaries. This can benefit your loved one while still retaining their eligibility for government support programs if done right.
Third-party special needs trusts
As the name implies, third-party special needs trusts are not funded by property owned by your loved one. Instead, you will need to create the trust for their benefit when laying down your estate plans.
Should you consider having a special needs trust?
In most instances, it is the best way to go about estate planning for a loved one with special needs. However, it is important to look at other factors before making your final decision. They include costs involved such as administrative fees and the general lack of independence by your loved one regarding how the funds in the trust should be utilized.
It is vital to have an in-depth knowledge of the pros and cons as well as the other options to go about securing your loved one’s interests.