No 1. Asset Protection
The costs of caring for a loved one with a disability are high, and families often accumulate funds for care in bank, brokerage, and retirement savings accounts. Without proper planning, these funds can be drained very quickly, and government benefits programs can require depleting or “spending down” these assets before approving benefits. Special needs trusts shelter these funds so they are not counted as assets, avoiding spend down requirements.
No 2. Benefit Eligibility
This is important when trust funding is finite, the costs of lifetime care are not, and the beneficiary may currently use or someday need benefits. Federal and most state benefits programs use income and/or asset maximums to determine eligibility. This includes Medicaid, Social Security, housing, in-home care, and more. These benefits can often be valued at thousands of dollars every month (or more) making them a critical component of lifetime care. Assets in special needs trusts are not included in assessing eligibility and can help ensure continuity of care.
No 3. Resource Management
Families caring for a loved one with a disability face a daunting array of expenses. These can include specialized therapies, personal assistance, transportation, living expenses, and more. Thoughtful planning can help manage expenses, supporting family resources and long-term economic stability.
No. 4 Family Relationships
The family work of caring for loved ones with disabilities is often complicated and emotionally fraught. Special needs trusts provide continuous professional trust management and an objective voice, reducing the burden on family members.
No. 5. Unintended Consequences
Financial gifts and inheritances that add to the resources for care of disabled loved ones can have great impact – when intentionally planned. They can also interrupt benefits by increasing income, be viewed as assets subject to spend down by benefits providers, and result in unexpected tax consequences. Gifts and inheritances that designate the special needs trust as the beneficiary (rather than the individual) avoid these risks.