Estate planning in Indiana often involves ensuring your loved ones can care for themselves after your death. If your loved ones include people with disabilities, you may consider setting up a special needs trust as part of your estate planning.
Definition and benefits of a special needs trust
Special needs trusts provide financial planning tools for you to provide supplemental funding for anyone in your life with disabilities.
The benefits of a special needs trust include the following:
• Does not interfere with a person’s ability to receive Medicaid
• Does not interfere with Supplemental Security Income (SSI).
• Allows the beneficiary a more significant income to cover costs that the need-based programs do not include.
Funding of special needs trusts
Typically, special needs trusts receive funding from life insurance, cash gifts or investments. You may also include retirement benefits or property. If you set up the trusts for someone else, the beneficiary cannot provide their own funding.
Uses of a special needs trust
In general, the trust pays for essential parts of a person’s life, such as education, medical treatment and recreation. Specifically, a special needs trust may help your loved one cover the following types of costs:
• Medical and dental expenses that Medicaid won’t provide.
• Special wheelchairs or other mobility equipment not covered by Medicaid.
• Summer camps or sports equipment
• Electronic equipment or computers
• Support care payments
• Insurance
• Funeral costs
• Motor vehicles or public transportation costs
Irrevocable trust
When you set up a special needs trust, you establish an irrevocable trust. This means you lose the ability to amend, modify or end the trust without permission from your beneficiaries. The funds in the trust also remain safe from any lawsuits or creditors.
If you plan to create a special needs trust, include it in your overall estate planning. Doing so ensures all your beneficiaries receive the assets you intend for them.