When you Need a Trust – Real Property in Multiple States
Revocable Trusts provide a host of benefits to the beneficiaries of a deceased loved one. Probate is avoided and administration is less cumbersome. These are nice benefits of a revocable trust; however, some clients feel that these benefits do not outweigh the cost of setting up an estate plan with a revocable trust.
A circumstance that make a revocable trust really needed is when you have a beneficiary that is disabled or is “special needs”.
Needs based government programs such as Medicaid and SSI, provide for an individual’s food and shelter at a very modest level. The recipient of these benefits may not, with some exceptions, have assets greater than $2,000.
If you leave such an individual a gift through your Will or Trust exceeding this limit, he or she may be disqualified from his or her benefits. This unintended consequence would create more harm than the potential good of receiving the bequest.
It is important to leave monies to such an individual through a Special Needs Trust which restricts the distribution of funds to third parties for amenities such as transportation, furnishing, and travel for the disabled individual’s benefit. In this way, you are able to provide for the individual over his or her lifetime, giving an enhanced lifestyle, while not jeopardizing the governmental benefits.