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Many times, we have come across family
with physically challenged individuals. This is the group of people who
need extra care. If you have a disabled heir in your family, you may
want to help him in whatever way you can. One of the good ways to help
him is to set up a special needs trust.
How to Set Up a Special Needs
Trust for a Disabled Heir?
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You have to take note that the disabled
heir is actually receiving some aids from the government such as
Medicaid and Supplemental Security Income (SSI). To ensure he continues
to receive these benefits from the government, he is not supposed to
receive any outright gift. Otherwise, these benefits may be forfeited.
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The right way to do it is to set up a
special needs trust, which may eventually direct to him when needed.
The money put in the trust will be managed by a the trustee. Basically
the trustee will invest the money and utilize it to provide cares,
which are not covered by Medicaid and SSI, to the disabled heir. For
instance, items like non-food groceries, utilities, transportation
(either buying a new car or spend it on public transportation),
education, entertainment (like DVD players and TV), gadgets (like
camera and laptop), fitness equipment would not disqualify him from
receiving the government benefits.
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You may choose whether to establish an
"inter vivos" trust, which take effect without having to wait until
your disabled heir achieves the age of 18. You may also choose whether
to make the trust a revocable or irrevocable one. If you set up a
revocable trust, you can still access to the money if you want to and
is taxable as part of your estate upon your demise. An irrevocable
trust, on the other hand, will not form a part of your estate should
you pass away and therefore non-taxable. And you will have no access to
it in any way.
If you decide to set up a special needs
trust, it is strongly advisable to get the service from an attorney who
is experienced in setting up the trust. This is important as laws vary
from one state to another.
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