Many people believe that a will is the best way to provide for their loved ones once they’re gone. While a will offers many important benefits in establishing an asset management plan after death, there are some circumstances under which a trust is a better option for your loved ones.
If you have a loved one with special needs, setting up a special needs trust can offer huge advantages over setting up direct inheritance. This type of trust is specifically designed with the needs of a special needs beneficiary in mind. Below are three core benefits of an SNT.
- It’s not technically income. This is an advantage if your child benefits from subsidized housing, Medicaid or other Supplemental Security Income (SSI) support. If a beneficiary’s income is too high, they could become ineligible for SSI. However, by putting your assets in an SNT, the special needs beneficiary is not technically the owner of the assets.
- You can enhance your loved one’s life. There are specific restrictions on the ways in which money in an SNT can be spent. However, it’s not strictly used for purchasing basic necessities, either. It can also help fund a higher quality of life for your child— beyond what is provided through government benefits. You can use a special needs trust to fund things like hobbies, vacations and furniture in addition to extra support, such as hiring a one-on-one caregiver or a physical therapist.
- You can create and it fund while you’re still alive. Unlike a will, you can put a special needs trust into effect while you’re still alive. Doing so can help alleviate your own responsibilities as well as ensure that your trustee acts in the way you’ve instructed.
As with a will or any estate plan, you want to be absolutely certain that your special needs trust is legally valid. An experienced estate planning attorney who understands the nuance of the law is an important asset in creating such a document.