If you have a loved one with special needs in Arkansas, it may be a good idea to plan your estate in a way that they’ll be provided for when you are unable to do so. A special needs trust can also be helpful if you want to ensure they benefit from government programs like Medicaid or Supplemental Security Income. However, for this plan to work, you must sufficiently fund your trust.
As with all types of trusts, you can fund a special needs trust (SNT) by making a cash gift. You can make this gift outright or through your will.
You can also fund an SNT by deeds transferring real property, such as your home or land, into the trust. To do this, you’ll need to sign and record a new deed with your local county recorder’s office that lists the trust as the new owner of the property. So, all income generated from the property, such as rent or sale proceeds, will go into the trust.
In addition to real estate, you can also transfer personal property, such as cars, jewelry or art, into an SNT. Again, you’ll need to sign a document transferring ownership of the property from yourself to the trust.
Another way to fund an SNT is by designating the trust as both the owner and beneficiary of a new life insurance policy. Or, you can change the ownership and beneficiary designation on an existing policy you own. This type of funding can be especially helpful if you don’t have much cash on hand but want to leave a larger sum of money to your loved one.
It’s critical for you to factor in taxes, fees and other costs when deciding how to fund an SNT. You’ll also want to consider what types of assets you have and whether it would make sense to use them to fund the trust. For example, if you own a real estate business, you may not want to sell it or transfer ownership since that could disrupt its operation.