If you have a special needs child or include a special needs individual among you loved ones you undoubtedly worry about how to protect and provide for your child or loved one both now and in the future. Taking care of a special needs child is less complicated than an adult from an estate planning perspective. In fact, care must be taken when including a special needs loved one into your estate plan to avoid jeopardizing much needed benefits your loved one may depend on for assistance. These considerations often leads to the question “ When do I need a special needs trust? ”
A special needs trust, also referred to as a supplemental needs trust, is an extremely helpful estate planning tool for anyone who has as special needs child or loved one. Most special needs individuals depend on assistance from federal programs such as Medicaid and SSI. Eligibility for those programs, however, depends on the applicant’s income and assets. A special needs child who has assets above the asset limit will lose eligibility for much needed assistance. For this reason, you cannot provide for your child when he or she becomes and adult by simply gifting assets to your child. You can, however, transfer those assets into a special needs trust which will then provide supplemental assistance above and beyond what federal assistance programs provide.
Creating a special needs trust also works to protect funds received from a personal injury settlement or inherited from another well-meaning family member. In essence, any assets gifted or awarded to your special needs loved one could jeopardize participation in assistance programs on which your loved one depends. By placing those assets in a special needs trust they are able to supplement the benefits your loved one receives from assistance programs without jeopardizing those benefits.
In order for a trust to be recognized as a special needs trust very specific language must be used in the drafting of the trust agreement. Failing to use the correct language will defeat the purpose and intention of the trust. For this reason, it is imperative that you consult with your Illinois estate planning attorney if you believe that a special needs trust is right for you and your situation.
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