If a disabled child inherits, the assets can be counted towards social benefits, meaning the child doesn’t actually benefit. A special needs trust can prevent this.
How a special needs trust protects assets
Parents of children with disabilities want to ensure their child is well cared for after their death. A special needs trust makes it possible to financially secure the child without jeopardizing their entitlement to state support. This way, the inherited assets remain protected and are used to their fullest potential.
Important aspects of a special needs trust
• Executorship : To protect assets from state seizure, a lifelong executorship should be stipulated in the will. An executor manages the assets and ensures that they benefit the child.
• Successive inheritance : This regulation ensures that after the death of the child, no one has to pay for the social welfare costs incurred during the child’s care.
• Do not disinherit a child : Disinheriting a child to obtain social assistance is not a solution. In this case, the child still has a right to their compulsory share of the inheritance, which can be claimed by the social assistance provider.
• Expert advice : Drafting a will for a person with disabilities requires expert knowledge. Seek advice from a specialist lawyer in inheritance law or a notary.
Social benefits and inheritance
People with disabilities often rely on state support such as basic income support or long-term care assistance. Whether these benefits are granted depends on income and assets. ” Inheritances can lead to social benefits being reduced or suspended until the assets are reduced to the so-called protected asset limit, ” explains lawyer István Cocron.
Inheritance reduces social benefits
If a person with a disability inherits a large fortune, it must first be used to cover costs such as social assistance. Little money remains for personal needs like special therapies, leisure activities, or additional medical services. A special needs trust prevents this problem.
Prior and subsequent inheritance: A central regulation
By stipulating a prior and subsequent heir in a will, the testator can determine who may use the assets and in what order. The disabled person is appointed as the prior heir, while another child or an association can be named as the subsequent heir. This arrangement protects the assets from liability under social welfare law, as the subsequent heir inherits directly from the testator.
Restrictions and exemptions of the prior heir
A restricted heir cannot simply dispose of the inherited assets to secure the estate for the subsequent heir. However, the testator can stipulate in the will that the restricted heir is exempt from certain restrictions. Whether this is advisable depends on the individual case. Many experts recommend not exempting the restricted heir and instead appointing an executor.
Executor in a key role
An executor manages the inherited assets and protects them from being seized by social welfare agencies. This task can initially be undertaken by a parent. However, a substitute executor should also be appointed to take over the management should the original executor be unable to do so.
Administrative instructions in the will
To ensure that the disabled heir can benefit from the inheritance, the executor should receive clear instructions. This can be stipulated through administrative provisions in the will. For example, it can be specified that money be made available for personal needs such as vacations, medical treatments, or special purchases.
Conclusion
A special needs trust offers the possibility of protecting the assets of a disabled child while simultaneously preserving their entitlement to social benefits. ” The combination of prior and subsequent inheritance, executorship, and clear administrative instructions ensures that the assets are used effectively, ” says attorney Cocron. It is essential to seek expert advice when drafting a special needs trust to fully explore all legal options.
