Do you care for a loved one who has disabilities? Establishing a special needs trust for this person can provide financial stability without compromising eligibility for programs such as Social Security disability insurance.
Review the basics of special needs trusts if you face this situation with a family member in Colorado.
What is a special needs trust?
Supporting your loved one financially can affect his or her eligibility for federal benefits. By creating a special needs trust when you plan your estate, you avoid this issue by transferring property to the ownership of the trust. You also appoint a trustee who will manage the funds for your family member.
While the trustee cannot give cash to your family member under Medicaid and SSDI rules, he or she can use the trust to fund other needs. Common examples including rehabilitation, transportation, recreation, education, medical and dental costs, home furnishings, travel and personal care assistance.
How do you create a special needs trust?
A Colorado attorney can draft the required documents for a special needs trust. However, after establishing the trust, you must transfer property to the ownership of the trust. Other family members can also gift assets to the trust on behalf of the beneficiary. A trust can hold any type of property, but the trustee may sell tangible assets such as jewelry or real estate to fund your loved one’s needs beyond Medicaid and SSDI benefits.
In addition to funding a special needs trust during your lifetime, you can also name the trust as a beneficiary of your estate. Careful estate planning can ensure that your child or family member with special needs has the financial support he or she needs throughout life.