As with most questions under the law, the decision whether a person should leave an inheritance to a disabled beneficiary is that “it depends.” However, in most instances, if a beneficiary is disabled or incapacitated, you should consider whether a special needs trust is required.
If you have a beneficiary who suffers from a disability which may or already does result in the beneficiary receiving “needs based” governmental support, such as SSI, then you should consider setting up a special needs trust to receive the inheritance for the beneficiary. Otherwise, receiving the inheritance could result in the beneficiary losing eligibility for the governmental benefits.
When a special needs trust is established, it receives and holds the inherited assets which can be used–in a limited fashion–to help meet the needs of the beneficiary. The assets held cannot duplicate or replace benefits provided by the governmental program but they can supplement them.
For example, let’s say you have a grandchild who suffers form autism and likely will always be receiving governmental SSI and Medicaid benefits. You want to leave something to the grandchild but you don;t want to impact his or her disability benefits. You can still leave that child an inheritance so long as you do not leave it to them directly. Instead, the assets go into an irrevocable trust and are available so long as they do not duplicate the child’s disability benefits.
Establishing a special needs trust involves complex legal issues and therefore you should consult an experienced estate attorney in order to draft the trust.
