No one in my family has a disability, so why would my estate plan need to include a Special Needs Trust?
1) Unless you can tell the future, you have no way to know whether anyone who may eventually inherit from you will be disabled at the time of inheritance. This writer was previously the Corporate Counsel for a company that provides intensive rehabilitation to persons who have accidentally acquired a brain injury. She would bet money that not one single patient’s spouse, parent, or grandparent got a card in the mail telling them that one of the beneficiaries was going to have an accident and become disabled.
2) You do not REALLY know who is going to inherit from you. If the person or people you have named die before (or at the same time) as you, your contingent beneficiaries will become primary beneficiaries. Often these are grandchildren who may be soyoung that you do not yet know if they are going to a develop a disability that sometimes afflicts people in their early 20s.
3) If you have already incorporated a special needs trust into your planning document and a beneficiary happens to be disabled, the inheritance is funneled into a special trust where a) the money is not counted as an asset of your beneficiary for purposes of disqualifying him or her from the government benefits he or she may be receiving; b) the money is available to enhance your beneficiary’s quality of life (just as you intended); c)neither your beneficiary’s creditors or the state of Iowa can reach any of the money,; and d) any money remaining after your beneficiary has died can be directed to another one of your beneficiaries.
If you have had your Last Will and Testament or your Revocable Living Trust updated within the past five years, it may already contain a contingent Special Needs Trust. Get it out and read it. If it does not, consider updating it. If you have not gotten a Will or Trust yet,do it now. If you die without one, and you have a beneficiary with a disability, you have created a problem. A Special Needs Trust may also be created as its own document. If you already know you have a beneficiary with a disability have a discussion with an estate planning attorney about creating a Special Needs Trust.
