If you have an heir with special needs and you’re trying to think about how to put them into your estate plan, it may not be wise to simply leave them money and assets in your will. This is the easiest way to do it, but it can have some unintended consequences.
Instead, you may want to consider using a special needs trust. You can fund the trust with the money you want to leave to your heir.
Retaining benefits through an inheritance
The problem with just leaving your inheritance directly to the heir with special needs is that they may qualify for government benefits. Some of these benefits, like Supplemental Security Income, are based on asset limits and financial needs. If you give your heir a significant amount of money or assets that have a lot of value, that can make it so that they no longer qualify for their benefits. Instead, your money has to be spent down until they qualify again.
By putting the money in a special needs trust and keeping it out of your heir’s name, then they still qualify for their benefits. You can set the trust up so that it pays for things that the benefits wouldn’t cover. In this way, your inheritance still helps your heir significantly, but it doesn’t make it so that they lose the benefits they were already counting on.
Consider all of your options
This is just one option for how you can use a trust to facilitate your desires through an estate plan. Make sure that you are well aware of all the options that you have and the legal steps you’ll need to take to get everything set up properly.