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Five upsides to setting up a special needs trust

You're looking over the pros and cons to a special needs trust, trying to determine the best course of action. There's a lot to consider, and a significant financial move like this isn't something you want to take lightly.

Below are five potential upsides. Remember that all situations are different, so you must consider yours specifically, but these issues could factor in.

  1. The person getting money from the trust may still be eligible for other benefits, such as Medicaid and Supplemental Security Income (SSI). You can pass on assets without taking these other benefits away.
  2. Control of the money is given over to the trustee. This ensures that the money is used as intended and gives the beneficiary of the trust the assistance he or she requires.
  3. You know that the money is going to be used properly and that the individual with the disability will be cared for. Leaving money directly, without a trust, may not accomplish the same goal since there are no restrictions in place.
  4. The money you put into the Special Needs Trust is tax-deductible.
  5. The money cannot be taken in a legal judgment. Creditors can't come after it in bankruptcy, for instance. This guarantees that the person who has the disability has financial support at all times.

Again, every situation is different, but you can see just how useful a trust can be when passing on your assets. It allows you to directly address needs and be confident that the money will be used properly. Be sure you know all of your legal options and the steps needed to set up the trust.

Source: Friendship Circle, "The Pros and Cons of a Special Needs Trust: Ensuring Your Child’s Future," Melissa Stuart, Oct. 27, 2017

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