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Setting up a special needs trust

If you have a child or loved one with special needs, you may want to do everything you can to provide for them if you no longer are able to be with them. A special needs trust can help. It protects your loved one, as well as his or her benefits and savings.

A special needs trust is essential. Although the government does provide for the basic necessities someone with special needs has, a special needs fund helps provide additional funds to the disabled party. The trust is a separate entity, which means that giving money to your loved one in this way will not disrupt his or her Medicaid or Supplemental Security Income (SSI). It won't affect any means-assessed benefits.

Benefit programs typically require that applicants have no more than $2,000 in assets at any one time. Additionally, the disabled person has a limit on how much of an income he or she can have. Fortunately, the trust is a way to work around those limits.

To set up a simple special needs trust, you may spend around $2,000. It's a good idea to add an average of $100,000 to the trust as well. These funds can be added in many ways including with life insurance policies, inheritances and family assets.

A trustee helps guarantee the safety of these funds as they go in and out. A normal charge is around .5 to 1.5 percent yearly on the value of the trust if you go through a bank trust department. Your attorney can help you decide on the best path forward when creating your special needs trust.

Source: CNBC, "How to set up a special needs trust," Mark Henricks, accessed April 26, 2018

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