If you’re considering executing an estate plan in Indiana, or have an existing plan that needs updating, you’ll be glad to know that the process is customizable to your needs. This means that you don’t have to include or omit specific documents in your plan. You’re free to decide which legal documents best fit your needs. If, for instance, you have a child or other immediate family member with special needs, you might wish to consider incorporating a special needs trust into your estate plan.
There are several key factors to remember regarding a special needs trust. First and foremost, if you’re going to execute this type of trust to provide for your loved one, you must do so before he or she reaches age 65. Once you place assets in trust, they receive protection because they are not subject to creditors or legal judgments. Keep reading this post to discover five additional issues you’ll want to learn more about before signing a special needs trust.
A special needs trust is irrevocable
The estate planning process often includes options for specific documents. Regarding trusts, there are two main types: revocable and irrevocable. A special needs trust falls under the latter category, which means that, once you have signed it, it becomes immutable, meaning you cannot modify or change it.
A beneficiary may have physical, mental or chronic health issues
If your child, spouse or other loved one receives government-funded financial assistance because of physical or mental incapacitation or a chronic illness, he or she might be a candidate for a special needs trust. Placing funds in trust will not affect your loved one’s eligibility for government assistance provided through the Social Security Administration or Medicaid. This is because funds in a special needs trust do not count as income to the beneficiary when he or she applies for government assistance.
Special needs trust funds cover expenses public assistance doesn’t cover
The funds you place in a special needs trust can help cover expenses your loved one might have that public assistance programs do not cover. Such expenses might include things like certain medical bills, transportation costs or payment to caretakers.
You must appoint a trustee when you execute an irrevocable trust
The fourth point to remember regarding a special needs trust is that you must designate (or ask the court to appoint) someone to oversee and manage the trust and the disbursement of its funds. This person is known as the “trustee.” You might choose another family member, legal guardian or a corporate trustee to fulfill this role.
What if the beneficiary of a special needs trust dies?
You’ll want to learn more about Indiana estate planning laws regarding a special needs trust, including what happens to remaining assets in the trust if the beneficiary dies. In some cases, programs like Medicaid may receive reimbursement for services it provided. In other cases, remaining assets might go to other beneficiaries. Make sure you understand all legal implications before signing a special needs trust.