Special Needs Trusts
In order to qualify for many types of assistance, a person is often restricted in the value of assets he or she may own (some assets are excluded from consideration: home, clothing, furniture, etc).
If any of your beneficiaries is receiving social security income, Medicaid income or another form of government income when your estate is distributed, the result could be a disruption in that income.
A solution for these beneficiaries is to have a special needs trust to withhold a distribution to the beneficiary. That beneficiary can still have a share of the estate but the share will remain in the trust rather than being distributed. That share is not calculated in the value of the person's estate.
The successor trustee has the discretion to make distributions to the person after calculating the impact of the distribution on any assistance the person may be receiving.
The successor trustee may provide gifts to the person using their trust share as long as the gifts have no monetary value, such as movie tickets and other quality-of-life purchases.
Because of the complexity involved with these distributions, give extra consideration to whom you may be appointing as successor trustee. There are resources your successor trustee can use to ask questions and receive help. If you feel uncomfortable with a friend or family member, another option is a corporate trustee, which is a professional business that will likely be experienced in these matters.
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