A Guide to Helping Heirs with Disabilities

If you have a family member with a disability who relies on you, you’ll want to ensure they can get the care they need throughout their lifetime. Estate planning for a special needs adult requires thoughtful planning and preparation. Read this guide to learn how to use your estate to serve the unique needs of your heirs. 

It can help to get advice from a pro who can offer advice based on your family’s situation. Connect with a Farm Bureau agent who can help guide you forward.  

How a Special Needs Trust Can Protect Your Heir

One way to make sure your loved one is cared for is through a special needs trust. This type of trust gives your family member access to funds without reducing their government benefits, such as Social Security, Medicaid, or Supplemental Security Income (SSI). 

Setting up a special needs trust can give you peace of mind, knowing that your loved one can afford to cover some of their expenses. 

Who’s Involved in a Special Needs Trust?

Some of the people who play a role in these trusts include:

• Grantor: The person who is setting up the trust.
• Trustee: The person who is responsible for managing the trust and making payments from it.
• Beneficiary: The person who the funds are used for. 

When you set up the trust, it’s important to make its directives and purpose clear for the trustee. That way, you’ll know that the money will be spent in ways you intend. 

Types of Special Needs Trusts

These are the two main types of special needs trusts:

• Self-funded special needs trust: Also called a first-party special needs trust, this type of trust allows people with disabilities to use their own money to fund the trust. It has to be irrevocable, which means it can’t be changed or ended without permission that usually needs to be approved by a court. In addition, the trust must be established before the beneficiary turns 65.
• Third-party special needs trust: Also called a supplemental needs trust, this type of trust is funded with money that doesn’t belong to the beneficiary. It may come from sources like parents, gifts, life insurance policies, or an inheritance. These can be revocable or irrevocable.

How You Can Use a Special Needs Trust

Money in a special needs trust can be used for certain expenses that aren’t covered by government benefits, like costs for medical care, caregivers, and transportation. It can’t be used for food or housing. Using it for those purposes could affect your heir’s government benefits.

When Does a Special Needs Trust End?

This type of trust lasts until the beneficiary passes away. In some cases, you will need to use assets from the trust to pay back services provided by Medicaid. Remaining assets are part of the beneficiary’s estate.

Work With a Pro to Set Up a Special Needs Trust

At Farm Bureau, we understand how important it is to protect your loved ones. We can work as part of a team of professionals as you create your estate plans so you know your family member is well cared for. Reach out for a consultation.