Estate Planning for a Disabled Person Using a Supplemental Needs Trust

Jul 15, 2020 | Estate Planning

Have you ever wondered or been concerned about the future of a disabled loved one?  If you answer yes, you are not alone.  My parents had a daughter with cerebral palsy and were concerned about her wellbeing and what would happen if she was not properly provided for during her adult years.  If you have a child, sibling, parent, or other loved one struggling with a physical, mental or developmental disability, they may be entitled to government benefits, such as Social Security and/or Medicaid. Most of these benefits are available only to those with limited means.

Having a disabled loved one leaves you with difficult choices. Leaving an inheritance to a disabled person without proper planning will reduce or disqualify them from receiving government benefits which are crucial for their care. You can preserve the disabled person’s government benefits and inheritance by creating a supplemental needs trust.

A supplemental needs trust cannot be controlled by the disabled person and the trustee must exercise control over distribution of the assets and any income generated.  The disabled beneficiary cannot have the ability to demand any principal or income from the trust.

It is important that you choose a trustee who can be trusted.  You may want to consider a parent, child, or other family member who also understands and cares about the disabled person. However, choosing a family member could create a possible conflict of interest, especially if the trustee will inherit the trust assets after the disabled person dies, which may cause the trustee to care more about preserving trust assets for themselves than providing for the disabled person.  You may want to consider having a corporate trustee, such as a bank or trust company that regularly manages trusts, act as sole trustee or as a co-trustee with a family member.

Please call 435-674-9718 and ask for Phillip Gubler. The information in this article is for educational purposes only and is not intended to be construed as legal advice.

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