A trust is a financial planning instrument that contains assets and one person (the trustee) manages it for another person’s (the beneficiary’s) benefit.
There are certain cases where you may want to set up a special needs trust to ensure that your family member receives something from you when you pass without negatively impacting them.
What is a special needs trust?
According to FindLaw, special needs trusts exist for the benefit of people who have certain disabilities. This can include physical or mental disabilities. Special needs trusts are often made to benefit people who do not have the mental capacity to manage their own money or bills. These trusts are also often used to ensure that the beneficiaries do not lose any government benefits they are receiving.
Generally speaking, the trustees on these trusts are usually family members. Otherwise, the court may appoint a third party to be responsible for the trust. It is important to choose the right trustee and that they always uphold the needs of the beneficiary.
What are the benefits of setting up a special needs trust?
In most cases, people with certain disabilities qualify for government assistance. You may want to provide for your family members in your will and leave some assets to them, but this can be a mistake. Receiving assets, such as large sums of money, can disqualify your loved ones for the government assistance they are receiving.
If you set up a special needs trust, however, you can avoid this issue. This is because the trustee has control of the trust, not the beneficiary. This allows your loved one to receive money without losing their benefits.