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Why might one include a special needs trust in their estate plan?

On Behalf of | May 17, 2019 | Estate Planning

Raising a special needs child is an act of love, and many parents in Virginia who find themselves in such a situation want to do all they can to make sure their special needs child lives life to its fullest. However, parents of special needs children may be concerned about how their child will be cared for once the child is grown and the parents are no longer able or alive to care for the child. One way to address this scenario is through proper estate planning, and for many this includes the execution of a special needs trust.

Many parents are relying on government benefits to pay for their adult special needs child’s care. However, to qualify for Medicaid, food stamps and other benefits, a person’s income and assets cannot go beyond a certain threshold. However, a special needs trust can provide a person with the funds needed to pay for medical care, entertainment, travel and other expenses that enhance that person’s quality of life, while still allowing that person to remain eligible for government benefits.

A third-party special needs trust is executed and funded by a person other than the adult special needs child and is managed by an independent trustee. Unlike a self-settled special needs trust, the beneficiary of a third-party special needs trust can designate other individuals who will receive any remaining trust assets once the adult special-needs child passes away, rather than having to use those assets to reimburse the state for the benefits provided.

Keep in mind that special needs trusts are legal documents and can be complex. A boilerplate document may not be enforceable in court and it may not meet all the needs of those involved. Therefore, it is important for those interested in executing a special needs trust to seek the legal guidance they need to ensure such documents are legally sound and accomplish their specific goals.