If you’re one of many people in Indiana and throughout the country who have a loved one with special needs, you understand how challenging certain issues involving health care and expenses can be. You might also worry that something could happen to you where you would no longer be able to be there to care for your loved one. Executing an estate plan that includes a special needs trust is an option that has given many people in similar situations peace of mind.
Your loved one might qualify for certain public assistance programs that are based on income or specific asset restrictions. One of the benefits of a special needs trust is that the money funded into the trust doesn’t count toward the qualification process for public assistance.
A special needs trust can help fill in the gaps
The financial implications of caring for someone with special needs can be overwhelming at times. The financial support your loved one receives through public assistance programs might not always be enough to cover expenses. That’s where a special needs trust comes in. Such a trust covers a percentage of costs that public assistance may not help meet.
There are, however, restrictions regarding how special needs trust monies are spent. For instance, they cannot go toward certain expenses associated with food or shelter. Permitted expenses for which trust money may be used often include things like transportation costs, medical expenses or caretaker fees.
There are multiple ways to fund a special needs trust
Your loved one’s own assets may fund his or her special needs trust. When such a trust receives funds in this way, the assets in question may be subject to certain Medicaid repayment regulations. Another way to fund a special needs trust is for a third party, such as a parent, to deposit money into the trust.
When a third party funds a special needs trust, the monies are not subject to Medicaid repayment rules. One of the greatest benefits of executing a special needs trust is that it enables your loved one (as the beneficiary of the trust) to receive additional financial support without having his or her eligibility for public assistance jeopardized.
A special needs trust is irrevocable
Executing an estate plan is a process through which you may choose to incorporate or omit any number of specific documents, such as a Power of Attorney, a last will and testament or a trust. There are two basic types of trusts — one that is revocable (also called a “living trust”) and one that is irrevocable.
A special needs trust is irrevocable, meaning that, once it is set up, it can never be revoked for any reason. It is permanent. The monies in a special needs trust are also not at risk of seizure by creditors or to pay compensation awarded in a lawsuit.
Choosing the options that best fit your loved one’s needs
Caring for a loved one with special needs can be a rewarding experience, yet challenging, as well, if adverse health issues or financial problems arise. Indiana lawmakers understand that you want what is best for your family member, which is why the estate planning system is set up to enable you to customize a plan to fit your loved one’s specific needs.
It’s always helpful to speak with someone who is well-versed in such issues before executing a special needs trust or any other type of estate planning document.