Estate planning for a beneficiary with special needs should be done carefully. To ensure that their interests are well looked after once you are gone, you may need to do things differently. For instance, while you may want to pass over assets and properties to your loved one, doing so with a simple will may be counterproductive. Here is why.
First, they may not be able to manage their portion of the estate. A third party will have to be involved, and even then, you are not sure that they will act in your loved one’s interests without a legally binding agreement.
Secondly, they may be ineligible for government support programs if their assets exceed the financial threshold required. To be eligible for such programs as Medicaid, you need to own less than $2,000 worth of assets. Since a will transfers ownership of assets to the beneficiary, your loved one could end up with assets valued beyond the limit.
A special needs trust could help
A special needs trust works almost like any other kind of trust. You put your assets in the trust and pass over ownership to the trustee. The management and control of assets held in the trust will be done by the trustee, while your loved one will be the beneficiary.
When done right, your loved ones will continue to benefit from their share of the estate while retaining their eligibility for government support.
Learn more about such kinds of trusts
When making your final wishes regarding your assets and property, there are several estate planning tools you need to know about. For instance, a special needs trust could come through when a loved one has special needs.
Therefore, it is advisable to be aware of all your options before settling on the one that will help you achieve your objectives.