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Protecting a loved one’s benefits with a special needs trust

On Behalf of | Jan 7, 2021 | Estate Planning |

Most parents and grandparents in Tennessee want to leave something behind to help out their loved ones, but there can be complicating factors. For example, leaving a sizable asset to a loved one with special needs could interfere with his or her ability to receive government assistance. This is when using a special needs trust would be appropriate.

People with disabilities or special needs often rely on government assistance for help with things like housing and medical care. These benefits are generally needs based, though. This means that receiving a big asset or a lump sum of money in an inheritance could cause someone to lose his or her:

  • Supplemental Security Income — SSI
  • Medicaid
  • Subsidized housing
  • Vocational rehabilitation

It is still possible to leave an inheritance to a loved one with special needs without interfering with his or benefits. Instead of leaving something directly to that individual using a will, the inheritance can instead be placed into a trust. Another individual — the trustee — would manage and take care of the trust on behalf of the loved one — the beneficiary. The trustee could then use the funds on behalf of the beneficiary as necessary or according to the trust’s instructions, without the beneficiary losing access to any benefits.

A special needs trust is still a good idea even if the beneficiary does not rely on government benefits. This is because trusts give people greater control over how inheritances will be used or handled, which many people in Tennessee find quite useful. Establishing a trust can be a tricky process though, so it may be helpful to reach out to a knowledgeable attorney for guidance.