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Should you set up a special needs trust?

Estate planning is not only a way to determine what happens to your assets, but it also provides you with opportunities to help your beneficiaries. If you have a beneficiary with a disability, you may need to consider more than just a will or standard trust.

special needs trust is a way to ensure your beneficiary remains eligible for government assistance while also receiving an inheritance. Here are some important facts to know about setting up a special needs trust.

Unique concerns

It may be a good idea to create a special needs trust if you have a beneficiary with a disabling condition that makes him or her eligible for government benefits, such as Social Security Disability Income or Medicaid. Those with developmental disabilities, blindness, chronic mental illness, paralysis or cerebral palsy are common recipients of such benefits. There exists a wide variety of physical and mental impairments that may cause someone to qualify for government benefits. 

How it works

The main reason to enact this particular type of trust is that leaving a disabled beneficiary with a lump sum of money via an inheritance can disqualify him or her for government assistance programs. A special needs trust allows you to avoid this issue by giving control of the funds to a trustee, instead of giving it directly to the beneficiary. 

By naming a trustee, you appoint someone to manage the assets for the sole benefit of the heir. A trustee may perform the following duties:

  • Managing and investing funds according to trust terms and state law
  • Spending trust funds for the beneficiary only
  • Staying up to date on and complying with laws regarding government benefits
  • Preparing reports the government requires
  • Filing trust tax returns 
  • Using additional trust funds to purchase goods or services for the beneficiary

A robust estate plan is one that caters to the unique needs of you and your family.

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Mccullough & Mccullough

Serving South Texas For Three Generations

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323 E. Jackson Street
Harlingen, TX 78550

Phone: 956-320-1320
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