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Estate Planning For Special Needs

July 15, 2022 - 2 MINUTE READ

A special needs trust can be set up to ensure that a loved one is well taken care of now and in the future. We all most likely know someone with a disability that requires special attention or have a family member of our own that we look after. A special needs trust can only be established for those under the age of 65 and is designed for an individual with a physical or mental disability. This usually means that the person cannot work and needs ongoing support from the government1

The cost of setting up this type of trust can be around $4,000 to $5,000 for an attorney to set up but having the peace of mind that your loved one will be cared for is priceless. Like a simple trust, the beneficiary cannot have the ability to change or take direct distributions from the entity. Each state monitors these types of trusts to confirm they are setup correctly and that the beneficiaries aren’t being taken advantage of. 

One final decision you may have about this type of trust is transferring your assets while you’re alive or at your time of death. There are tax consequences depending on what route you chose, so consulting with a tax professional is usually recommended. Leaving this type of legacy can also affect the beneficiary when it comes to Medicaid and Social Security.  Back in 2019, “The Setting Every Community Up for Retirement Enhancement Act” was established to aid those with a disability who inherited a retirement account. They are now permitted to spreading out those withdrawals over their lifetime, as opposed to most people that have 10 years to withdraw the entire balance. 

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