Estate planning does many things and offers many protections, but most importantly, it allows you to protect your loved ones long after you are gone. Your estate plan should not be one of those standard forms that anyone can find and fill out on the internet. It should fit your needs and specifications, which it can, depending on how one ultimately writes it. If you go for the one-size-fits-all approach, your loved ones may end up paying the price for it later.
A good example of needing to tailor an estate plan would be planning for an individual with special needs to inherit your assets. Many Illinois residents have children or other family members with disabilities whom they wish to take care of when they are no longer around to do it. One way they can is by setting up a special needs trust. Without one, your loved one may lose access to much-needed government benefits when he or she inherits your property.
What a special needs trust does
This trust operates like most other trusts. A trustee of your choice manages it. It holds monetary assets to distribute according to a schedule you set or, in some cases, according to specific needs. What makes a special needs trust stand out from other trusts is that the funds can only cover certain things, such as:
- Health care
- Transportation costs
- Caregiver expenses
Funds may cover a few other permitted expenses. An estate planning attorney can offer insight on allowable spending.
Setting up a special needs trust
A special needs trust for a loved one is often called a third-party special needs trust or supplemental needs trust. This simply means that someone other than the person it is meant to take care of is funding it. Making sure the trust is set up properly can be a painstaking, complex process. The wording has to be just right to protect government benefits. Thankfully, this is something you do not have to figure out and draft on your own.
Keep the trust up to date
After creating a special needs trust, fund it and keep it up to date. The rules regarding eligibility for various government programs, such as Medicaid and Social Security benefits, are always changing. So, adjusting the terms of the trust on occasion to ensure they are in line with the current rules may prove necessary.