Previously on the blog, we’ve discussed the importance of a special needs trust. These trusts can help ensure that your loved one who has extensive medical needs can secure financial stability without jeopardizing their ability to obtain the treatment and care that they need. This is possible through a special needs trust because assets that are placed in the trust are left out of income calculations when determining whether your loved one qualifies for Medicaid.
But still, that may leave you wondering what a special needs trust can pay for when it comes to supporting your loved one. Therefore, let’s look at how special needs trust assets can be utilized.
What can special needs trust assets pay for?
Fortunately, the list of appropriate uses of special needs trust assets is pretty broad. In fact, your loved one may be able to use the assets for any of the following:
- A primary residence
- A vehicle
- Special equipment, like a wheelchair or oxygen machine
- Personal effects
- Even a vacation
That list is pretty long, and it’s not even exhaustive. There are a lot of ways that a special needs trust can provide stability to your loved one without jeopardizing their ability to access needed medical care and treatment.
Are there limitations?
There are some restrictions on how special needs trust assets can be used. For example, if cash is paid out from the trust, it’s not a good idea for your loved one to use those funds to go out dining at restaurants. Also, your loved one will be restricted to purchasing one vehicle, and there may be limitations on the vacation costs that the funds can appropriately pay for.
You’ll also want to be aware of any payback provisions that may apply, meaning that any funds left over in the special needs trust after your loved one passes away will be paid back to Medicaid to try to offset the funds the program expended in providing your loved one with care.
Considering whether a special needs trust is right under your circumstances
You have a lot of estate planning options at your disposal. A special needs trust is only one of them. And it may or may not be the best avenue to provide your loved one with the care and stability that’s needed. Therefore, you shouldn’t settle on a special needs trust until you’ve adequately assessed your circumstances and the other trusts that you might be able to utilize to suit your needs.
Then, once you decide on your best course of action, you should ensure that you’re properly funding your trust and creating your estate planning documents in a sound and legally valid way. Only then can you be assured that your loved one will be adequately protected in the long term. You may also want to carefully consider who you want to name as the trust administrator, as this individual will make important decisions about distribution of assets for your loved one’s benefit.
Legal guidance is available if you need it
It’s easy to get confused and overwhelmed when dealing with estate planning. The process can be so daunting that many people just turn to a simple will, which may not provide them and their loved ones with needed protection. Therefore, if you’d like to learn more about what you can do to create the best estate plan under your circumstances, you might want to consider reaching out to an attorney to discuss the matter further.