Developing an estate plan is a necessary process no matter what one’s family size or financial situation. However, it is especially critical for the parents of children with special needs. In Texas and elsewhere, one potentially helpful estate planning tool for such individuals is the special needs trust.
A special needs trust preserves a beneficiary’s eligibility to get government benefits that are based on need. This includes Supplemental Security Income, for example. Normally, if such an individual receives an inheritance or gift, his or her benefits are in jeopardy since the gift/inheritance may cause the beneficiary to exceed the maximum resources, or countable assets, allowed.
One type of special needs trust, called a first-party special needs trust, is funded by using assets that belong to the beneficiary with special needs. Funding this type of trust preserves his or her eligibility for benefit programs. Up until the start of January, the beneficiary’s grandparent, guardian or parent, or a court order had to establish this type of trust. Now, anyone under 65 can establish his or her own first-party special needs trust. People who lack the capacity to sign such a trust, however, must still depend on a court order or a third party to help create the trust.
It is natural to want to steer clear of talking about death, which is why estate planning is often placed on the back burner for many individuals in Texas and across the country. However, failure to create an estate plan may mean that one’s assets will not end up being distributed according to one’s wishes. An attorney’s help can make it possible to create a detailed estate plan that effectively communicates one’s desires in the event of one’s death.
Source: lakeconews.com, “Estate Planning: First party special needs trusts”, Dennis Fordham, Jan. 27, 2017