Plan an inheritance for a loved one with disabilities while carefully considering eligibility for means-tested benefits.
Why an ordinary inheritance can create problems
An outright inheritance may affect eligibility for certain means-tested public benefits. A properly structured special needs trust may help preserve access to benefits while providing supplemental support. The type of trust, source of funding, and program rules matter.
Third-party and first-party trusts are different
A trust funded with property belonging to someone other than the beneficiary raises different drafting and reimbursement questions from a trust funded with the beneficiary’s own assets. The correct form is central to planning.
Trustees and distributions need thoughtful guidance
The trustee needs workable instructions about distributions, recordkeeping, beneficiary needs, and coordination with benefits. The goal is not just a legally valid document, but a trust that can be administered responsibly.
Coordinate the entire estate plan
Wills, revocable trusts, life insurance, and retirement account beneficiary designations should be reviewed together so that an unintended direct gift does not undermine the intended plan.