Many people cannot live independently, such as older parents, grandparents and even younger family members with special medical needs. They often require individualized care and treatment, such as physical therapy, medical equipment and assisted transport – and not all of those things are covered by insurance. A special needs trust can be created to help loved ones with special needs while helping ensure they receive government benefits.
Before setting up a special needs trust, it is important to understand how it works and the two types of trusts. Here is what you should know:
How does a special needs trust work?
A special needs trust can be set up to secure an individual’s assets if the size of their estate would disqualify them from government-supplemented medical benefits, such as Medicaid or housing. A trustee is named to be in charge of administering the trust’s assets. Because the trust’s assets are owned in the name of the trust and controlled by a trustee, the government does not consider these to be the beneficiary’s assets when making determinations for needs-based programs like Supplemental Security Income (SSI) and Medicaid.
It then falls on the trustee to use those assets in the trust to provide for the beneficiary. While the beneficiary cannot receive funds directly without affecting their benefits, the money can be used to cover things like medical equipment, furniture, transportation, outings, home care services not provided by insurance, entertainment and hobbies.
Because there are a lot of complex rules associated with special needs trusts, it is wise to learn as much as possible about how they are created and how they can be used before deciding if one suits your needs. Professional legal guidance can help establish a special needs trust for a loved one and make sure it is properly funded.
