It's never easy to think about what will happen when you're gone. However, it's an eventuality you must plan for, especially if you have a child with special needs. Who will take care of them? Will they have the necessary monetary resources? These lingering questions can be answered years before if you have a special needs trust drawn up. Here are some of the most commonly asked questions about this type of trust:
My child has special needs. What will happen to him or her when I'm gone?
You may be anxious when thinking about the care your child will receive once you've passed. You might wonder if his or her quality of life will suffer with your absence. However, do you have the resources to ensure quality care without SSI or Medicaid assistance? If not, then your child will need these benefits and funds to supplement them. Hence the need for a special needs trust.
How does a special needs trust work?
It provides your child with benefits without losing public welfare assistance, like SSI and Medicaid. This type of trust comes in two categories: self-settled, where benefits like a settlement or inheritance don't interfere with governmental aid; and third party, where the disabled is given funds from family members and others.
Does my disabled family member need a trust?
It depends on the circumstances. Not every disabled person who has been awarded a settlement or inheritance needs a special needs trust to continue receiving government benefits. If your relative would have trouble overseeing the assets, may need benefits later or could be taken advantage of, then a trust is advisable.
Will the trust qualify them for Medicaid, SSI or other public aid?
No. The trust makes it easier to qualify for aid, although the individual must meet qualifications to receive assistance.
What will trust pay for?
It will provide the resources to pay for all types of medical treatments, like physical therapy, medications and devices. Daily living requirements, like a car, housing expenses, clothing and food, are also eligible to be paid for from the trust. SSI benefits may be reduced some if the trust is used to pay for food or shelter.
How are trusts taxed?
In order to establish and administer the trust, income, gift and estate taxes need to be considered and reviewed carefully by an attorney or accountant.
How does the beneficiary access the funds?
In establishing the trust, you must select someone to be the trustee. This person should not give your relative the funds directly, as this could disqualify him or her from future government benefits. Instead, the trustee should use the assets to purchase necessary items, like a personal care attendant, vacations, furnishings, medical expenses, etc.
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