When you have a loved one who has special needs that require them to have the assistance from needs-based programs, including public assistance, you might wonder how you can help to support them with an inheritance. There is tool available that enables individuals to do this. It is known as a special needs trust.

The special needs trust is an irrevocable trust that can only be used to cover allowable expenses for the beneficiary. Some examples of what can be covered include pet care, travel, supplemental medical expenses and entertainment. Some living expenses must be excluded from the trust. Those are spelled out and a statement is included in the trust that makes it clear that that trust isn’t meant for primary support.

The assets in the trust don’t count toward the assets for these programs because the beneficiary doesn’t have direct access to them. Instead, they have to count on the trustee to distribute things according to what’s allowable and necessary.

One positive aspect about this type of trust is that it is protected from creditors. Neither the beneficiary’s creditors nor your creditors can touch what’s in the trust since it is irrevocable. This means that you can be sure what you leave to your loved one will be used for their benefit.

This is only one aspect of the estate plan that you have to think about. Going through everything, including your will, powers of attorney designations and living will can help you to ensure that your wishes are accurately reflected by the plan. Remember to review the plan in its entirety every couple of years or when you have major life changes.