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What you need to know about special needs trusts

On Behalf of | Jan 8, 2023 | Estate Planning

Do you have a family member with special needs? If so, you likely understand that you will need to take steps to ensure they have the financial support needed after you pass away. 

Public benefits, such as Supplemental Security Income (SSI) and Medi-Cal, are available for some people with special needs. If you do not properly allocate assets you leave behind for them, however, they may be disqualified for these benefits. 

If you are concerned about this, you can use a special needs trust

What is a special needs trust?

With a special needs trust, you can provide your loved one with financial support without worrying about losing their eligibility for public benefits. 

The special needs trust can hold most assets you want to leave. This includes real estate, money and proceeds from your life insurance policy. Once you have put assets in the trust, they are the property of the trust, not the beneficiary of the trust. Because of this, they will not cause the beneficiary to lose their eligibility for the public benefits they receive. 

You must assign a trustee to the trust, who will manage its assets. Their job is to use the assets on behalf of the beneficiary. With a special needs trust, it is possible to ensure that the beneficiary does not lose their right to public benefits and that the assets are used appropriately. 

Creating a special needs trust may make sense for you

Knowing the legal way to create a special needs trust is recommended if you are considering setting this up for someone in your family.