When you have a child with disabilities, it is imperative that you obtain help from a knowledgeable and experienced estate planning attorney. You will want to plan for your child’s care when you are no longer able to provide it, but you cannot leave outright funds to your special needs child. An inheritance from you could result in your child exceeding the limit for assets or income allowed in qualifying your child to receive government benefits. The most effective way for protecting your child is to create a Special Needs Trust.

A Special Needs Trust, also commonly referred to as a Supplemental Needs Trust, permits an individual with a physical or mental disability to hold an unlimited amount of property and assets in a trust for his or her benefit. If this type of trust is drafted properly, the assets it holds will not be considered when determining if the beneficiary qualifies for certain government benefits such as Supplemental Security Income (SSI), Medicaid, and other benefits that are based upon need. The Special Needs Trust provides for additional care and luxuries over and above the benefits provided by the government.

It is important to understand that the Supplemental Needs Trust be created before the beneficiary turns 65 years old. It is typically recommended that this type of Trust be created early in the child’s life as a long-term means for holding property for the benefit of the disabled individual. This can prove beneficial if the disabled family member receives money or gifts from personal injury settlements, transfers from relatives or friends, insurance proceeds, or similar payments.

The expenses related to establishing the Trust may be tax deductible. However, if the trust receives funds outright, it could have some tax consequences. Thus, it is crucial that you confer with a seasoned estate planning attorney that can ensure the Trust is properly drafted and that you are fully aware of the tax implications. In certain instances, it may be wise to allow the trust to pay the taxes and invest the net proceeds. Let us review your individual circumstances and give you the advice and guidance you need to protect your loved one with special needs.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.