Your child or dependent relies on Supplemental Security Income (SSI) and Medicaid, and both programs come with strict financial limits. Leave them an inheritance outright -- or let a settlement or even a well-meaning gift reach them directly -- and you can unintentionally disrupt the very benefits they depend on.
That's where a Special Needs Trust comes in. There are different types of Special Needs Trusts, and the right approach depends on your family's situation. Many parents choose to create a third-party trust as part of their estate plan, which allows them to set aside funds now or through their will for future use. The key is making sure the trust is properly structured so it works the way it's intended.
Beyond the financial side, it's also important to think about who will step in to help manage things. Choosing a trustee is a significant decision, as that person will be responsible for handling the funds and making decisions in your loved one's best interest. In some cases, families may also need to consider guardianship or other arrangements to ensure that medical and personal decisions are handled appropriately.
Another piece that often gets overlooked is how all of your accounts and assets are titled. Retirement accounts, life insurance policies, and other beneficiary designations should be reviewed carefully. If those assets are directed to your loved one outright instead of to a trust, it can create the very issues you're trying to avoid.
The special needs planning guide examines trust design, decision makers, and benefit coordination for a disabled beneficiary.