Maximizing your resources to make the most out of what you have to give to your loved ones after you pass away is one of the primary elements of estate planning. But you also have to identify who it is that will be receiving bequests and how best to deliver them. Depending on the unique characteristics of everyone in your family the best vehicle of transfer can be different for various people who are on your inheritance list.

When you’re giving an inheritance to family members who have mental or physical disabilities there is an added level of intricacy to consider. Many people who face these challenges receive Medicaid benefits that take care of their health care expenses, and these can be considerable in a lot of instances. According to Medicaid rules you can’t have more than $2,000 in personal assets and still receive benefits, so when you take this into consideration you can see how an inheritance could wind up posing a problem.

One way that this situation can be addressed is through the creation of a third party special needs trust. You fund the trust and name a trustee, and it is important that the trustee understands the Medicaid rules thoroughly so that no expenditures are authorized that could jeopardize the eligibility of the beneficiary. The Medicaid recipient cannot have direct access to the resources of the trust and the trust can only provide for what are considered to be special or supplemental needs; food and shelter cannot be paid for by the trust.

Third-party supplemental needs trusts are revocable, so if for some reason the arrangement is not working out you do have the ability to dissolve the trust. In addition, the settlor of a special needs trust can choose to name a secondary beneficiary who would assume ownership of any remainder funds after the primary beneficiary passes away.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

If you have a disabled loved one who depends upon you for regular income, you can include this person in your estate plan with a Special Needs Trust. The trustee of the Special Needs Trust will watch over your loved one’s financial needs after you pass away. There are several benefits to using such a Trust for a special needs family member.

Compliments Government Funds

If your loved one’s disability keeps him or her from working a regular job, then he or she may be able to collect Supplement Security Income (SSI). SSI eligibility is only for individuals with a very low income. A direct inheritance will affect your loved one’s SSI as well as medical and housing assistance. Using a Special Needs Trust allows you to compliment SSI with extra funds to help your loved one live comfortably.

Provides for Minor Child

For minor children, an Irrevocable Trust can help throughout their childhood if you pass away before they are adults. A Special Needs Trust, which is a special Irrevocable Trust, can provide the same benefits for your disabled child. This will give you the peace of mind to know your child is taken care of medically and that your caregiver has enough funds to cover special care and special education for your child.

Provide Steady Income

Once your Special Needs heir reaches adulthood, he or she can count on the Special Needs Trust to provide a steady source of income. This income can cover every aspect of your loved one’s needs or it can supplement as mentioned above.

If your loved one doesn’t work, this income may be all he or she has. With a Special Needs Trust, if the inheritance is large enough, income can continue throughout your family member’s lifetime. This will help to cover additional special needs and medical needs as your loved one ages.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

A Special Needs Trust is an Irrevocable Trust that allows you to easily pass on an inheritance to a loved one with a disability. This unique Trust provides you with peace of mind to know your family member with special needs will remain financially stable after your die.

Dependent Relies on Your Income

Do you have a special needs dependent that relies upon you for income? Whether your dependent is grown or still a child, you can use a Special Needs Trust to leave funds to replace your financial assistance. The Trustee you choose to watch over the Trust will utilize funds for your loved one’s bills, medical care and any other needs that arise. If your dependent is still a child, you can have the Trust continue into his or her adulthood or have the funds pass to your heir(s) at that time.

Government Aid Recipient

Leaving an inheritance for a special needs loved one is a great way to make sure he or she will have some way to pay bills after you have passed away. If, however, a disabled loved one cannot work and receives government aid from Supplement Security Income (SSI) or Medicaid, a large inheritance could halt those government funds. To protect your family member’s aid status, a Special Needs Trust can provide additional support rather than superseding government assistance. This allows your Trust to act as an extra cushion for your loved one’s monetary needs.

Recipient Cannot Manage Funds

Are you worried that a loved one with a mental or physical disability may not be able to properly manage a large inheritance? If you want to provide this person with long term financial care, you can do so with a Special Needs Trust. This Trust allows funds to be dispersed over a set number of years or over your family member’s lifetime.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.