What to know about special needs trusts
It may be easier for special needs individuals to retain access to government services if their assets are held in a trust. However, it is important that their South Carolina parents carefully structure the trust so that it is exempt from income and resource rules. Special needs trusts must irrevocable, for the benefit of only one person and can only pay for medical or dental needs not provided by other sources.
However, money inside of the trust can pay for a vacation, a video game console or anything else a special needs individual could want or need. The reason why special needs trusts are exempt is because the beneficiary cannot access the resources it holds or demand that they be distributed. Those who create special needs trusts should inform family members and others to make gifts to the trust as opposed to the beneficiary directly.
Parents who have children with special needs should also take care to ensure that any assets that they inherit are put inside of the trust. It may be possible to name it as the beneficiary of a life insurance death benefit or other assets that come with beneficiary designations. Furthermore, they may want to look into Supplemental Nutrition Assistance Program or Temporary Assistance for Needy Families programs to help pay for food and shelter.
Creating a trust may make it possible to help keep assets outside of an estate. Doing so may make it harder for creditors to repossess those assets or for beneficiaries to potentially mismanage them. Trusts may also be effective tools for parents of special needs children who may need access to government programs. An estate planning attorney may talk more about the benefits of a trust and how to structure it in a proper manner.