Essential trusts for loved ones with special needs
Special Needs Trusts are typically established by parents for their disabled children, but any third party can establish one for the benefit of a disabled beneficiary.
While you can certainly bequeath money and assets to those with special needs, you want those assets to be held in a trust because otherwise the bequest may prevent the beneficiary from qualifying for essential benefits under the Supplemental Security Income (SSI) and Medicaid programs. Funds in a Special Needs Trust are not counted as available assets for determining eligibility for government benefits.
Because public monetary benefits are limited, providing only for bare necessities such as food, housing, and clothing, the government established rules allowing assets to be held in trust, called a Special Needs or Supplemental Needs Trust, for the benefit of SSI and Medicaid recipients, as long as certain requirements are met.
With a Special Needs Trust, more of your money can be used for supplemental expenses that will allow your disabled beneficiary to enjoy a higher quality of life. Otherwise, much of your assets will be used to pay for private care benefits that are extremely expensive and can drain even significant sums of money over time.
Establishing a Special Needs Trust
Generally, a Special Needs Trust should be established no later than the beneficiary’s 65th birthday. If you have a disabled or chronically ill beneficiary, you may want to consider establishing the Special Needs Trust at an early age.
One benefit of having the Trust in place is that if the disabled beneficiary receives funds such as gifts, bequests, or a settlement from a lawsuit, they can be immediately transferred to the Special Needs Trust without affecting that individual’s eligibility for government benefits. A Special Needs Trust also protects your disabled beneficiaries from potential creditors when you die.
Special Needs Trusts are our forte
It is important to consult competent counsel when creating a Special Needs Trust because a poorly drafted Trust can be easily subject to “invasion” by the government agencies that provide benefits.
Our law firm has the experience and expertise to establish effective Special Needs Trusts for anyone who wishes to provide for a disabled beneficiary. Please contact us today for a consultation to discuss your Special Needs Planning and the establishment of a Special Needs Trust.