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3 compelling reasons to create a special needs trust

On Behalf of | Apr 22, 2024 | Estate Planning

If you take care of a loved one with special needs, you may be wondering how to better ensure their welfare after you’re gone. Fortunately, you can consider creating a special needs trust for them.

A special needs trust (SNT) is a legal tool designed to provide financial security and support for individuals with disabilities. Here are several reasons why you may consider creating an SNT.

1. Preserving public benefits

Many adults with disabilities receive essential government benefits such as Medicaid and Supplemental Security Income (SSI), which are means-tested programs with strict income and asset limits. Without careful planning, an inheritance or financial gift could jeopardize their eligibility for these crucial benefits. By placing assets in a special needs trust, you can ensure that your loved one continues to qualify for these public benefits while still receiving supplemental support from the trust to enhance their quality of life.

2. Probate avoidance

The probate process can affect how your loved one with a disability receives their inheritance and can potentially lead to delays and additional expenses. By creating a special needs trust, you can bypass probate entirely or significantly reduce its impact. Assets held within the trust typically pass directly to the designated beneficiary without being subject to probate proceedings.

3. Protection from exploitation

A special needs trust is a powerful tool for safeguarding the financial interests of individuals with disabilities, particularly against exploitation or undue influence. Individuals with special needs may be vulnerable to financial exploitation or manipulation, especially if they lack the capacity to manage their own finances effectively. This prevents misuse of funds and offers peace of mind to both the beneficiary and their caregivers.

The process of creating a special needs trust is complex and you may consider seeking legal guidance to help ensure that the trust is properly structured and meets the specific needs of your loved one.