If you have a loved one who is physically or mentally disabled, then you know firsthand how difficult it can be to plan for the future. You may have asked yourself who will care for your loved one when you are gone. Or perhaps you have wondered how you or other family members can leave assets to your loved one without making him or her ineligible for government benefits.
A special needs trust may provide a solution in certain circumstances. In general, trusts are legal arrangements in which someone (the trustee) holds and manages property for the benefit of another party. A special needs trust is a specific kind of trust that may be established for people with physical or mental disabilities or chronic sicknesses. Special needs trusts can be an invaluable tool in planning for the future. If structured correctly, you can leave assets to your loved one in a special needs trust while still ensuring that your loved one can continue to receive government benefits like Medicaid and Supplementary Security Income (SSI). Without a special needs trust in place, a gift or bequest to a person with a disability may be counted in that person’s assets, making them ineligible for certain government benefits. The special needs trust permits spending by the trust on behalf of the disabled person for things not covered by a basic standard of living provided by those governmental programs.
Another type of trust, typically called a “spendthrift” trust or a discretionary trust, can be used to protect family members who may not be eligible for government benefits but still need protection from their own bad spending decisions, possibly due to autism or another mild developmental disability. The “spendthrift” trust typically provides that the trustee has the sole decision-making authority over distributions from the trust, and the protected person cannot demand access to those funds.
Special needs trusts can be crafted to fit the needs of specific individuals. The way a trust is structured will depend on the circumstances surrounding the beneficiary and the care or protection the beneficiary requires.
For assistance in establishing a special needs trust or spendthrift trust for your loved one, please contact Indiana estate planning attorney Allison K. Comstock at (812) 423-3183 or acomstock@KDDK.com, or contact any member of the KDDK Estate Planning Practice Team.
About the Author
Allison K. Comstock, a Partner at Kahn, Dees, Donovan & Kahn, LLP, in Evansville, Indiana, assists individuals in developing their estate plans to effectively utilize available estate and gift tax exemptions and provide for the strategic transition of assets to children and incapacitated family members. She advises executors and trustees during the complicated process of probate and trust administration. Allison also represents businesses and individuals in a wide variety of real estate matters and assists small business owners and physician groups with entity formation, negotiating contracts, and protecting the business owners’ interests. Allison enjoys utilizing her experience to find practical and successful solutions to her clients’ challenges, and takes the time to understand each client’s situation to provide personalized service. She is a member of the firm’s Business, Economic Development, Estate Planning, Healthcare, Real Estate, and Trust and Probate Administration practice groups.