Dealing with an illness or injury can be challenging. If you have a loved one who has a disability, you may want to give cash or other assets to him or her. After all, while money does not buy happiness, it can make life easier for those who have disabilities.
As you may know, there are several government programs that provide financial assistance and other benefits to disabled individuals. To qualify for many of these programs, though, a person typically must have limited wealth.
Your gift may do more harm than good
While being generous is certainly noble, your gift may do more harm than good. That is, if you transfer assets to your disabled relative, you may push him or her over the income limit for the government benefits he or she receives.
You can take advantage of an estate planning tool
According to AARP, there is a valuable workaround you may want to consider. With a special needs trust, you place assets into a fund for the benefit of your loved one. By not actually transferring ownership to him or her, you do not interfere with your relative’s eligibility for means-tested government benefits.
Your loved one benefits from a trustee
In addition to utilizing disbursements from the trust, your loved one benefits from the trustee who oversees the special needs trust. This trustee may help your relative find important resources to better meet his or her medical, social and psychological needs.
Ultimately, by exploring all your estate planning options before giving assets to your disabled relative, you ensure your gift is as beneficial as possible.