Key Takeaways:
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Trusts give you control over asset distribution and reduce taxes.
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Special needs trusts protect government benefit eligibility.
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Choosing a reliable trustee is crucial for managing the trust.
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Consult an elder law attorney to create a tailored trust plan.
Trusts help you manage property or assets for another person or entity’s benefit. The trustee—the individual or entity managing the trust—makes decisions that best serve the beneficiary. Trusts offer many advantages. You can set clear conditions on how and when your assets distribute after your death. They also reduce estate and gift taxes and help you avoid the lengthy and costly probate process.
What Are Special Needs Trusts?
Special needs trusts benefit individuals with physical or mental disabilities. Unlike standard trusts, they include specific terms tailored to the beneficiary’s unique lifestyle and needs. These trusts protect the beneficiary’s eligibility for government benefits like SSI and Medicaid by excluding trust assets from asset limits.
Choosing the Right Trustee for a Special Needs Trust
Choosing a trustee for a special needs trust is vital. You must select someone you trust to act in your loved one’s best interest after your passing. Most often, a trusted family member who understands the beneficiary’s needs fills this role. If you cannot appoint a family member, the court will assign a third party to manage the trust following your instructions.
Protecting Government Benefits with a Special Needs Trust
The trustee controls the trust’s assets, not the beneficiary. This setup allows government programs like SSI and Medicaid to ignore those assets when they check eligibility. Many families mistakenly transfer assets directly to a loved one with special needs through a will. This error can disqualify the beneficiary from vital government assistance because they exceed asset limits.
You can also set up a special needs trust to hold legal settlement proceeds on behalf of the beneficiary. This protects the funds from impacting government benefits or paying damages if the person with special needs faces a lawsuit.
Why Consult an Elder Law or Special Needs Attorney?
Even if you believe your loved one with special needs will not require government benefits, a special needs trust provides essential financial security and flexibility. These trusts offer ongoing support tailored to the beneficiary’s needs, including caregiving and financial assistance throughout their life. If they apply for government benefits later, a properly structured trust will protect their eligibility.
Setting up a special needs trust involves complex legal steps. An experienced elder law attorney or special needs attorney can review your unique situation and help create a trust that safeguards your loved one’s future.
If you have questions or want to speak with a special needs or elder law attorney, please contact our Sherwood or Searcy office at 501-834-2070 to schedule a consultation. We look forward to assisting you.