Sometimes you may have the best of intentions but ultimately wind up doing more harm than good. This comes into play when you are interested in setting aside something for a loved one with special needs.
A simple last will may come to mind as the ideal vehicle of asset transfer. You are not exposed to the estate tax so you assume that a last will is going to suffice. You think that a trust is not necessary because you are not extraordinarily wealthy, though you have been comfortably successful.
You start to map out who and in what amounts you plan on distributing your estate. You record your wishes in a last will without regard to the specific life situation that each inheritance recipient may be in.
People with special needs often receive government benefits such as Medicaid and Supplemental Security Income. You cannot be in possession of significant financial resources if you want to qualify for these programs.
If you pass along a significant sum of money to someone receiving these benefits, the influx of resources could render this person ineligible for the benefits they were previously receiving.
Special Needs Planning in Cincinnati
However, there is a solution to this problem that people generally utilize when they want to provide an inheritance for special needs family members. Assets can be conveyed into a supplemental trust that can be administered by a separate trustee for the benefit of someone with special needs.
Distributions can be utilized to improve the quality of life of the beneficiary without jeopardizing his or her eligibility for government benefits.
The lesson here is to make no assumptions. Sometimes, giving a gift to a loved one can cause more harm than good. Consult with a licensed estate planning attorney before you decide that a particular strategy of asset transfer is right for you.
For more information regarding special needs planning, contact Zimmer Law Firm at 513.721.1513 today for a consultation.