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Why a special needs trust is crucial for your disabled loved one

If you have a disabled family member, then you likely are aware that government subsidies awarded by both the state and federal government aren't intended to allow him or her to live overly comfortably. Instead, they're only intended to ensure that his or her basic needs are covered just over the poverty line.

This is why it's important for families with people with either mental or physical handicaps who receive government benefits to learn more about how funding a special needs trust. It's one of the only ways to ensure that their interests will be protected in the long term.

Special needs trusts are often set up by a disabled individual's parents, guardian or other relatives. However, once in place, anyone who wishes to contribute to the support of that beneficiary can add funds to it.

Family members of disabled individuals are often encouraged to set up this type of trust as a way of ensuring that his or her loved one will continue to be eligible to receive government aid. Family members of those receiving Security Supplemental Income (SSI) and Medicaid often set them up.

If the trust were not in place, then any income the disabled individual were to make or assets they were to inherit in excess of $2,000 would make them ineligible to continue receiving this government support.

Also, another reason family members or loved ones of a disabled individual may set up a special needs trust is to supervise what the funds are allocated to.

Many withdrawal or payout guidelines are written in such a way that these types of trusts are only able to be used for expenses not covered by these government programs such as vision or dental care or recreation costs. Cash payouts made directly to the beneficiary could be misconstrued as income and thus result in the government aid he or she receives being withdrawn.

Forecasting how costly expenses may be for your loved one in the future may prove to be a difficult task. Additionally, you may find that setting up a different type of trust or some alternative type of savings account may be better for your loved one's situation. If you're looking to determine what's the best option for your and family, then a Queens, New York, estate planning attorney can help you make sense of it all.

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