When you are making an estate plan, it is important to consider each beneficiary specifically. The steps that you take to leave them an inheritance will be different depending on their needs, your estate planning goals and the specifics of their situation.
One time when this is a very important component of estate planning is if you have a beneficiary who has special needs. It may be useful to incorporate a special needs trust into the overall estate plan.
How does this help?
A person who has special needs may already qualify for certain types of government benefits. They may even rely on these for the rest of their life.
But to get them, they have to pass a means test. They must show that their assets and income are at a low enough level that they qualify for the benefits. In other words, if you just left them $100,000 in your will, they may be required to spend that down, or they would fail the means test and be disqualified from their benefits.
But if you put the money into a special needs trust, it does not count as part of their own estate. They do not own the money in the trust. This way, they still qualify for benefits, and your selected trustee can use the money to help the beneficiary with costs that are not covered by those benefits.
Setting up a trust
A special needs trust is just one type of trust you can consider when making an estate plan. Be sure to carefully look into all of your options at this time.
