It can be disheartening to have a relative who cannot work due to a disability. Fortunately, your loved one might not be entirely out of luck. According to USA.gov, there are some social programs that provide benefits to individuals who need them. While beneficial to recipients, these benefits are often modest.
To qualify for many types of public benefits, individuals must prove they have limited income and few assets. This is a problem for you, as any money you gift to your relative might disqualify him or her from public assistance. A special needs trust might be the solution.
What is a special needs trust?
A special needs trust is an important estate planning tool for relatives of individuals who have disabilities. With a special needs trust, you set aside money for your loved one’s benefit without actually transferring ownership of it to him or her. This means the assets in the special needs trust are not countable for purposes of qualifying for public benefits.
How can your relative use the special needs trust?
When your relative wants access to funds in the special needs trust, he or she reaches out to a trustee. The trustee then determines whether a disbursement is permissible under the rules of the trust and the public assistance program. If it is, your loved one can use funds in the trust to pay for expenses the public program does not cover.
Ultimately, if you are looking to make life a bit easier for your relative, establishing a special needs trust can accomplish your goal without jeopardizing your loved one’s public benefits.
