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How can you use special needs trust assets?

On Behalf of | May 11, 2023 | Estate Planning, Probate & Estate Administration |

Figuring out how to disperse your estate when the time comes can be stressful enough, but you might find yourself feeling even more overwhelmed if you have a loved one with a medical condition who relies on you for support.

How can you ensure that their needs are met when you’re gone? While you might be able to ask family and friends to help look after them, that may not be enough to ensure that your loved one has the financial support that they need.

Luckily, though, the estate planning process gives you options. Amongst them is the use of a special needs trust. With this type of trust, you’re able to set assets aside for your loved one’s use without affecting their ability to qualify for income-based programs like Medicaid and Supplemental Security Income.

How can special needs trust assets be used?

That said, a lot of people worry that the restrictions placed on the use of special needs trust assets are going to be too strict to provide much help to their loved one. Fortunately, this isn’t the case. In fact, there’s a wide range of things that your loved one will be able to use these trust assets for, including each of the following:

  • Medical care that’s not covered by insurance
  • Necessary medical equipment
  • A vehicle
  • Rehabilitation services
  • Therapy
  • Education
  • Job training
  • Furniture
  • Appliances
  • Transportation
  • Computers
  • Other electronic devices
  • Entertainment
  • Vacation

This is just a start. As you can see, the list is pretty extensive, meaning that you can help give your loved one the life that you want for them while still ensuring that they receive the protection afforded by government programs like Medicaid.

How can you use special needs trust assets?

Yes. Generally speaking, trust assets can’t be used to pay for housing costs, as well as for food and utilities. The trustee managing the trust should also avoid making cash distributions to the beneficiary where its use can’t be tracked, or even buying gift cards with the intent of allowing the beneficiary to use them on whatever they want.

If the trust makes any of these restricted disbursements, then they’ll probably be counted as income, which can dramatically impact your loved one’s ability to receive Medicaid and the support provided by Supplemental Security Income. This is why you’ll want to make sure that you have a trustee in place that you know will abide by your wishes and adhere to the terms of the trust.

Is a special needs trust right for you and your loved one?

It really depends on the circumstances. Although there might be other estate planning options available to you to help you care for your loved one when the time comes, a special needs trust can go a long way toward helping you achieve your goal. So, as you embark on your estate planning endeavor, be sure to give a special needs trust the consideration it deserves.

Do you want to learn more about the customization of your estate plan?

An estate plan can be custom-tailored to suit your needs. But to find a way to ensure that your plan meets your needs and your vision of the future, you need to know your options and how to leverage them as fully as possible.