If you leave assets or designate income to be distributed to a disabled individual in your will after you die, that additional income or assets may exceed the financial guidelines of certain government sponsored programs. If they do, the individual may lose all or some of their government benefits. For this reason, it is especially important to prepare and execute a special needs trust as soon as possible or ideally when creating your will.
How it works
A special needs trust works in a way that leaves the assets in the ownership of the trust itself and not the actual beneficiary. Therefore, it is the trust that provides the benefits to the individual who needs them. When set up correctly, a special needs trust can help prevent a disabled person from losing their government program benefits.
A special needs trust can hold real estate, cash, stocks and other various assets. The benefits of a life insurance policy can also be paid through the use of a special needs trust, again, ensuring that the benefits go directly to the person who needs them the most.
It's important that your special needs trust is set up correctly and meets certain legal and state requirements. For this reason, it is to your benefit to speak with an experienced estate planning attorney.