Setting up a special needs trust (SNT) for your loved ones with a disability or special needs is a good way to protect their government benefit eligibility, after you are gone. But if your family members aren’t aware of your good financial and legal planning, an inheritance or other gift from them may impact your loved ones’ future.
Bring everyone to the table
Whether your family is very open about money, or they keep to themselves about finances, it’s important to have an open conversation. If people are comfortable, forming and managing an SNT can be a family process. Once you have contacted your special needs attorney and set the plan in place, sit down with your family members, communicate plans and get them involved.
Talk about why
It’s important that everyone understands very clearly that any inheritance or gift of money that goes directly to a person with disabilities who is receiving government benefits could be devastating. List the government benefits your loved one receives or will receive, and let your family know that your loved one could lose those government benefits, if he or she receives other income or assets.
Talk about what
Explain that you’ve found a way they can still leave an inheritance or gift money to your loved one. Let them know that simply designating your loved one’s SNT as the beneficiary for any financial asset will avoid the problem of losing government benefits. Then, give your family members the title of the trust, so it can be named as a beneficiary.
Talk about how you feel
Your family may have questions and concerns. Try to be patient and responsive. For the process to work, everyone needs to feel heard and accepted and have a clear understanding of the importance of the SNT to the beneficiary.
Make sure you store the trust information, along with guardianship documents, powers of attorney, wills and other important papers, in a safe place. You may need to access these papers occasionally, so having them in a central location -- or as electronic copies in a digital vault -- could make your life easier. In addition, your family members (especially those who may be successor trustees or caregivers) need to be able to find everything, in case something happens to you. Get everything organized and communicate where the family can find information, if needed. This step is often overlooked but can make a big difference.
- Talk to a financial advisor to get started
- Find a special needs attorney
- Set up your special needs trust (SNT)
- Give your family the title of the special needs trust
- Get organized
Neither Voya Financial® or its affiliated companies or representatives offer legal or tax advice. Please seek the advice of a tax attorney or tax advisor prior to making a tax-related insurance/investment decision.
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