Creating an estate plan requires attention to detail and a thorough understanding of the repercussions of specific choices. There are a wide variety of choices to be made when making your estate plan, including not only potential beneficiaries, but the estate planning instruments you should use to achieve your chosen goals. A special needs trust is one instrument you may want to consider for your estate plan.
One reason many people choose to include a special needs trust in their estate plan is because one of their selected beneficiaries relies on particular state benefits. If your beneficiary relies on particular state benefits, such as Medicaid or Social Security Disability payments, then their eligibility to continue to receive those benefits may be put in jeopardy. These benefits have strict requirements for how much the recipient can own or generate in income to continue to receive those benefits. A special needs trust can be used to make sure you can leave particular assets for the benefit of your family member or loved one while making sure that the recipient does not have a problem continuing to receive important benefits.
Another reason a special needs trust may be right for you is if you want to make sure to protect family assets from creditors or divorce. If you have an adult child, you may want to consider using a special needs trust to make sure that the assets are protected in the event that adult child is divorced. During a divorce, a court will divide marital assets. Depending on how your adult child treats assets that you gift to him or her, those assets could be divided in that divorce. With a trust, the assets will belong to the trust, and not to the adult child. Accordingly, those assets would not be subject to division in a divorce. Similarly, the right kind of trust can protect assets from any creditor trying to collect on debts, as the assets will belong to the trust and not to you or your beneficiary.
You may also want to consider a special needs trust if a minor is going to be the one receiving your assets or if the minor is receiving regular payments, such as from a structured settlement. A child cannot receive these assets directly under Minnesota law, so you may want to consider a special needs trust as a way for the minor to receive the benefits of the assets even though he or she cannot directly receive those assets.
If you have questions about which type of estate planning structure is best for you, we can answer them. Call us at 651-413-9568 to talk about your case and your assets and your goals