3 Advantages of a Special Needs Trust

Utilizing a special needs trust can provide you with several benefits when you have family members that have special needs. Here are a few of the advantages of a special needs trust.

1. Non-Countable Assets

Many special needs individuals qualify for benefits from the government and other programs. Sometimes, if they have certain assets, they will not be able to qualify for these benefits. With the special needs trust, the assets within the trust are considered non-countable. This means that they will still be able to qualify for benefits even though they have the trust.

2. Not Subject to Creditors

Another benefit of this type of trust is that assets within it are not subject to creditors. Even if you or the special needs individual has some type of debt, creditors will not be able to seize the assets within the trust. This means that the money within the trust is going to be protected and ensure that the special needs individual is taken care of.

3. Guarantees Use of the Funds

If you have a special needs individual, using a special needs trust can guarantee that the money that you want to give them gets to them. If you leave it in the care of someone else, there is a chance that it could end up not being used for their care.

What are the tax implications of a special needs trust?

A special needs trust is a type of estate planning tool that is used to take care of individuals with special needs. This type of trust also has some tax advantages when it comes to allocating money to the care of such an individual. This type of trust can help an individual avoid having to pay estate and gift taxes when the money is passed on. With this type of trust, a separate legal entity will be created. This means that the special needs trust will also have to pay federal taxes on any income that is generated.

What expenses does a special needs trust cover?

A special needs trust can cover many of the living expenses that are necessary for a person with special needs. In most cases, the money from the special needs trust will go to pay for any medical expenses that are not covered by Medicare or some other type of long-term disability insurance. For example, if the individual needs to live in a nursing home or in some other type of medical facility, the special needs trust could pay for the costs involved. It can also pay for other living expenses such as rent and food.