A special needs trust can be a must if you have a person with a disability on your inheritance list. Individuals who are in this position often qualify for government benefits like Medicaid and Supplemental Security Income. These are need-based programs. They are not available to people who have sufficient financial resources.
Let’s say that you were relatively financially successful but you got into an accident. You have hundreds of thousands of dollars in the bank. Even though you are not working, you can’t immediately obtain Medicaid and Supplemental Security Income because you have some of your own monetary resources to fall back on. These programs are for people who have no other recourse.
On the other hand, suppose you were without portfolio and you were receiving these benefits. If you suddenly came into a great deal of money you would probably become ineligible. This is why a special needs trust can be so valuable.
A special needs trust can be created to set aside assets that can be used to improve the quality of life of a person with a disability without jeopardizing his or her benefit eligibility. The special needs trust is alternately called a supplemental trust. The trustee that you choose administers the funds that have been conveyed into the special needs trust.
The trustee can use these assets for certain purposes that are beneficial to the person with a disability, but under the program rules this is allowable.
With this situation in mind let’s look at the practice of do-it-yourself estate planning. You can find instructions on how to do most anything on the Internet. Sometimes this is a good thing as you learn how to fix a leaky faucet or make an apple pie.
However, you have to know where to draw the line. If you make assumptions and use a download to create a generic estate planning document you may wind up doing more harm than good.
For example, let’s say that you create your own last will using online tools. You leave a direct inheritance to a person with a disability. You didn’t understand how this could impact government benefits.
When you pass away your family member gets the proverbial one-two punch. He or she loses a loved one, and this individual may also lose his or her benefits. The loss of benefits can far outweigh the influx of financial resources.
The only intelligent way to plan your estate is to discuss every detail of your family situation with a licensed Iowa estate planning attorney. It is likely that you will learn about legal devices that you had never even heard about, and your family may ultimately be the beneficiaries of this newly found knowledge.
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Ryan M. DenmanandDennis D. Duffy
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