A tricky part of estate planning is considering heirs who have special-needs. It’s especially complicated because your immediate relatives may not have disabilities, but you may have a more remote relative with special-needs. This is an issue that must be considered when crafting any Will or Trust.

“Special Needs” is a term used to mean a disability or incapacity, often a developmental-disability. It often means that the individual has need of government health-care benefits such as Medicaid, but not in every case. It is important to avoid disrupting vital benefits and even a small inheritance can do so.

If you have a family member with special-needs, then you, or someone in the family, needs to create a Supplemental Needs Trust (also called a Special Needs Trust or SNT). Then you and other family members can name that Trust as an heir or beneficiary. A well drafted SNT should protect benefits eligibility for your disabled loved-one.

If you don’t think you have enough money to need such a trust, you should think again. Medicaid eligibility is limited to those with less than $2000 in assets. If you leave even a small amount of money to a person on Medicaid, he or she may lose those vital benefits. A Trust is necessary even for a few thousand dollars.

You may be concerned about the cost of setting up such a Trust. The legal fees can be somewhat costly, but this is a complex area of law and it needs the expertise and experience of a good attorney to create the right plan and trust. In most cases, the legal fees to set up the planning will be much less than the cost of dealing with a bad plan (or no plan). It might cost tens of thousands in lost assets if a special-needs relative gets an outright inheritance, or thousands of dollars in legal fees to set things right.

You need to think about life-insurance and retirement accounts too. Your special-needs relative should not be named as a beneficiary of those assets. The same Medicaid disqualification will occur and those assets will be lost (with some lost to income taxes, too). You need a SNT as the beneficiary of those assets too.

Your relative might not get any government benefits now, or might get an entitlement benefit like Disability Insurance. Entitlement programs are not effected by assets so an inheritance won’t matter for those benefits. But, even those with disability benefits and Medicare sometimes need Medicaid when and if their condition worsens or when they are elderly. The SNT will protect assets in the future and those assets are available for your beneficiary even if there is no benefit problem.

You need to be concerned about a remote special-needs relative, too. Your Will may leave all assets to your children, but it probably says that the share that would have gone to a deceased child should go to your grand-children. If you have a disabled grand-child, then you need to consider this in your planning.

You should consider the issue of special-needs beneficiaries when engaging in your estate planning. If you have a disabled person in your family, you must make sure your lawyer knows about it and that the right planning is completed.  Attorney Edward Adamsky of Tyngsboro, Massachusetts,  is an Elder Law Attorney and experienced with Special Needs Trusts.