Colorado residents with comprehensive estate plans have confidence that their heirs will receive the inheritance set aside for them. If one of your beneficiaries has a disability, thorough preparation may mean using additional planning tools. Adding a special needs trust may help provide for them after you are gone more effectively than other financial instruments.
According to Kiplinger, a special needs trust protects your loved one’s inheritance against poor financial decisions and from those who may try to take advantage of them. The trust has a trustee, appointed by you, who distributes funds and manages assets in the account.
Preparing a realistic budget is essential when determining how much you should put into the trust. Although housing is often the highest unknown cost, there are other expenses that you must consider as well. Your loved one has a particular lifestyle and maintaining that lifestyle after you pass away has associated costs. Expenses related to the disability, including ongoing medical bills, can pile up quickly without appropriate planning.
Buying property or taking space in a care facility has associated costs such as maintenance fees. Food and other routine expenses also require financial resources. Which option you choose depends on your situation and how much is available for the trust. Funds typically transfer to the trust after you die. Over time, it can cover the expenses related to filing tax returns and trust administration.
Depending on the circumstances, your child may meet Section 8 housing, Supplemental Security Income and Social Security Disability Insurance eligibility requirements. A special needs trust allows him or her to qualify for these benefits, while still seeing to their needs. Visit our webpage for more information on this topic.
