If you have a loved one with extensive medical needs, then you’re probably worried about how they’re going to get by when you’re no longer around to support them. While you might be able to alleviate some of your concerns by leaving assets to your loved one through your estate plan, if you’re not careful your plan may not go far enough to protect as you deem fit.
This is because straight inheritances will likely be counted as income for Medicaid eligibility purposes. Therefore, even though a sizeable inheritance might give your loved one a certain amount of stability, it also forces them to use that inheritance to pay for the medical care that they need. This, in turn, can quickly gobble up the inheritance, leaving your loved one in a predicament.
Fortunately, a special needs trust can provide for your loved one without affecting their eligibility for governmental programs like Medicaid. But what can a special needs trust help cover?
The expenses that can be paid with special needs trust assets
The assets from a special needs trust can be used for a wide array of costs and expenses. Here are some that might be covered:
- Medical equipment that otherwise isn’t covered by insurance, like a wheelchair or a vehicle that’s specially equipped to transport them
- A vehicle for their own personal use
- Educational services
- Training services
- Home furnishings
- Vacation expenses
- Recreation and entertainment costs
- Home appliances
- Electronics, including a computer
- Insurance coverage
- Business-related expenses
- Burial costs
As you can see, this is an extensive list, giving your loved on a significant amount of support in their time of need while still allowing them to qualify for programs like Medicaid. A special needs trust, then, gives you the most bang for your buck.
Is there anything that a special needs trust won’t cover?
Yes. There are some limitations on how special needs trust assets can be used. This includes:
- Grocery expenses
- Mortgage or rent payments
- Condo or homeowners’ association fees
- Property taxes
- Utility bills
Your loved also won’t be able to use the trust to secure cash or to buy gift cards, either, which may leave them feeling like they don’t have a lot of flexibility. However, you and your named trustee can sit down and discuss the trust with your beneficiary so that they know what to expect from the trust when the time comes. That way there won’t be any surprises that leave your loved one uncertain and worried about how to make ends meet and get by.
Develop the comprehensive estate plan you need to meet your goals
There are a lot of different ways you can approach your estate plan. To find the path that’s right for you, take the time needed to think through what you want out of the future for those you care about. Once you’ve done that, you can start thinking about which estate planning vehicle best positions you to secure that outcome.
We know that the process can seem daunting, but we urge you not to view it as a challenge that should be put off until later. Instead, be excited about the ability to get what you want out of the process. If you feel like you need to know more about estate planning, what it can and can’t do for you, and how best to navigate it, then we encourage you to continue to seek out resources and guidance that can set you on course for the creation of a successful estate plan.