Many individuals have loved ones in their lives that may need extra care due to a disability or mental challenges. As one of these individuals, you undoubtedly want to ensure that your loved one has the financial ability to receive necessary care as well as meet daily life needs, especially in the event of your death. However, you may also understand that gifting money could cause complications with government benefits.
Luckily, trusts may prove useful to you if you want to help with your loved one's financial security without jeopardizing his or her receiving of government benefits. Specifically, a special needs or supplementary trust may allow you to provide funds for certain necessities.
Why a trust?
Though you could potentially leave a lump sum of money to your loved one in your will, that money becomes an asset of the beneficiary. As a result, government benefits and programs may see that money and determine what your loved one does not qualify for needed benefits. In turn, your gift could actually prove less helpful than you intended.
Trust assets do not go into eligibility consideration because an outside individual manages the trust. This trustee has control over the funds in the account; therefore, those funds do not technically belong to the beneficiary to use for whatever he or she pleases. Of course, the trustee should be a responsible and trustworthy individual.
Other uses of a trust
As mentioned, a trust could help protect an individual's government benefits. However, if you do not consider the loss of benefits a concern, a special needs trust could still prove useful. This fund sets aside money for specific needs, which could come in handy in the event of an emergency. Additionally, having this money set aside in a trust offers other protections, such as keeping the money out of the hands of other individuals should the beneficiary become involved in a lawsuit.
This type of trust may benefit each individual differently as he or she may have unique needs to meet; therefore, you may wish to find out more information on the exact uses for which you could utilize a special needs trust.
Because the use of such a trust could have various repercussions, you may want to ensure that the type of trust fits your circumstances. Discussing your desires, concerns and options with an experienced Illinois attorney may help you better understand how your loved one could potentially benefit from a trust.