If you have a loved one with extensive medical needs, you might worry about how they’re going to get by when you’re no longer around. Fortunately, there are steps that you can take to ensure that there’s a plan in place for them. One of your best options is to use a special needs trust.
This type of trust allows you to provide financial support to your loved one without affecting their ability to qualify for government programs like Medicaid. Therefore, by using a special needs trust, you can ensure that your loved one is able to live the life that you envision for them.
How can special needs trust assets be used?
Although a special needs trust can be helpful, there are some restrictions on how they can be used. You shouldn’t let these parameters stress you out as they’re looser than many people realize.
With that in mind, let’s look at how your loved one will be able to use special needs trust assets if you decide to leave some to them. Each of the following are allowable uses of these assets:
- Equipment that is necessary for their medical condition, such as a wheelchair
- One vehicle
- Medical expenses not covered by Medicaid or some other form of insurance
- Educational expenses
- Rehabilitation costs
- Business expenses
- Life insurance
As you can see, there’s a lot that a special needs trust can help cover without negatively impacting their ability to have to secure the health coverage that they need.
With that said, there are some restrictions on the use of these special needs trust assets. Here are some of the key things that a special needs trust can’t pay for:
- Property taxes
There are other actions that you should avoid when dealing with a special needs trust, too. This includes cash distributions to the beneficiary and purchasing gift cards with the trust’s assets. If your trust misuses its funds, disbursements might be counted as income for purposes of Medicaid eligibility determination, which could jeopardize your loved one’s future.
However, don’t let these restrictions scare you. The appropriate uses of special needs trust assets are extensive and very well may provide your loved one with the support that you hope they have.
Are there other options available to you?
Although a special needs trust can be a great way to support your loved one in the long term, there may be other options to help you achieve your goal. For example, you can choose to create an ABLE account. This account allows you to set money aside to help support a loved one who suffered a disability before the age of 26. This money doesn’t affect your loved one’s eligibility for Medicaid, but there are limitations to these sorts of accounts, such as the amount that you can contribute to it on a yearly basis.
How should you navigate your estate plan?
The answer to this question really depends on what you’re hoping to get out of your estate plan. Regardless of your vision of the future, there are legal avenues to get you and your estate plan to where you want to go.
However, in order to create the appropriately thorough estate plan that you want, you need to know your options and what each legal vehicle can and can’t do for your estate and your loved ones. This is where the assistance of an experienced estate planning legal professional might prove beneficial.
So, if you’d like to learn more about what an attorney can do for you, now may be the best time for you to reach out to a legal professional of your choosing.