If your loved one has physical or mental disabilities, working 40 hours every week for the entirety of his or her adulthood may be difficult or even downright impossible. Luckily, many Americans who cannot work qualify for financial assistance, provided they do not have too much income or too many assets.
According to reporting from Vox, means-tested public benefits often only cover basic housing, food and medical costs. This fact may make you shudder, as your loved one may not be able to afford to buy the things that make life worth living.
Special needs planning
The thought of your loved one barely getting by may make you shudder. There is a solution, though. With a special needs trust, you set money aside for your loved one’s benefit. Because this money is in a trust, it does not count as income when your loved one applies for government help.
A cautionary note
It is important for your loved one not to use disbursements from the special needs trust to pay for the same expenses that government programs typically cover, such as food, housing and basic medical care. If he or she violates this rule, your loved one may become ineligible for means-tested public benefits.
The special needs trustee
It may seem all too easy to make a mistake and inadvertently use funds in the special needs trust for an unacceptable expense. Luckily, there is an important failsafe. When you establish your trust, you designate a responsible trustee to oversee it. This person should have enough expertise to determine which disbursements are ok and which ones are risky.
Ultimately, if your loved one always uses the special needs trust correctly, he or she can pay for supplemental expenses without endangering his or her eligibility for public help.