Estate planning for special needs individuals

If a North Carolina family has a special needs member, it may be necessary to account for that in an estate plan. Ideally, a family will create a special needs trust (SNT) where family members can make contributions for that person’s care. It can also be where an inheritance or other gifts are placed as to not jeopardize that person’s ability to collect government benefits.

The trust should be funded with non-retirement assets whenever possible. This is because additional steps could need to be taken with respect to money within the retirement account being used in the SNT. Regardless of how the trust is funded, it can be a good idea to set a limit to how much money is left inside of it. For wealthier families, provisions could be used to cap a trust’s funding level or how much money a trustee can provide to the special needs beneficiary.

A life insurance policy could be an initial funding source for the trust if a family can’t otherwise fund it immediately. An exempt trust can be an effective tool that allows a disabled person to make use or his or her own assets while still remaining eligible for government benefits. However a trust is set up, reducing or eliminating court supervision should be among the top goals when creating it.

Creating a trust may offer a variety of advantages whether a beneficiary is disabled or not. For instance, assets inside of a trust may be exempt from creditors or from being used improperly by the beneficiary. An attorney may be helpful in drawing up a trust document as well as serving in the role of trustee. If desired, a trust may have multiple trustees who will work together to oversee it.