Estate planning is especially important for those who have disabled dependents. Planning for a disabled dependent is a very daunting task, especially when your disabled dependent will require constant care for the duration of his or her life. A recent article discusses one type of trust, the Henson Trust, which can assist parents in planning for a disabled dependent.
Importantly, a person cannot leave assets to his or her disabled dependents, outright, because this may negatively impact the dependent’s ability to qualify for means-tested government benefit programs such as social security disability benefits. Therefore, a parent transferring assets to a disabled child must transfer the assets in such a way that the inheritance is not considered income and an asset of the child.
The Henson Trust is one type of trust that addresses this problem. Developed in 1986, the Henson Trust allows caregivers to leave assets to a disabled beneficiary without reducing or eliminating means-tested government benefits. The way this trust works is that all the assets transferred to the disabled person are held in the trust, and the trustee exercises complete control over the distribution of the trust. The beneficiary has no right to demand distributions from the trust. Because the beneficiary does not own the trust, therefore, it is not counted in his or her assets.
For assistance in creating trusts to provide for your disabled dependents, contact us at (626) 696-3145.
