UNDERSTANDING SPECIAL NEEDS TRUSTS…

WHAT IS A SPECIAL NEEDS TRUST?

A special needs trust (SNT) is a legal tool designed to help families plan for the financial future of a loved one with special needs. It is created to ensure that the individual with special needs can receive financial support without jeopardizing their eligibility for government benefits, such as Supplemental Security Income (SSI) and Medicaid.

Here’s a breakdown of the key points about a special needs trust:

  1. Purpose: The primary purpose of a special needs trust is to provide financial assistance for the benefit of a person with a disability while preserving their eligibility for means-tested government programs. These programs often have strict income and asset limits, and if the individual were to receive a large inheritance or gift directly, it could lead to a loss of their essential benefits.
  2. Beneficiary: The beneficiary of the special needs trust is your child with special needs. The trust is managed by a trustee, who can be a family member, a close friend, or a professional trustee. The trustee’s role is to make sure the funds are used for the benefit of the individual with special needs according to the trust’s terms.
  3. Types of Special Needs Trusts: There are two main types of special needs trusts:
    • a. Third-Party Special Needs Trust: This trust is funded with the assets of someone other than the individual with special needs, like parents or relatives. It allows family members to leave an inheritance or gift to the child with special needs without affecting their eligibility for government benefits.
    • b. First-Party or Self-Settled Special Needs Trust: This trust is funded with the assets of the individual with special needs themselves. It is usually used when the person with special needs receives a large sum of money, such as from a legal settlement or an inheritance. Like the third-party trust, it helps protect their eligibility for government benefits.
  4. Distributions: The funds in the special needs trust can be used to supplement the government benefits the individual receives. The trustee can use the money to pay for various expenses not covered by those benefits, such as medical and dental care, therapies, education, transportation, home modifications, and recreational activities.
  5. Flexibility: The special needs trust can be highly flexible, allowing the trustee to adapt to the changing needs of the beneficiary over time. It can be tailored to suit the unique requirements and circumstances of your child.
  6. Legal Assistance: Creating a special needs trust is a legal process, and it is essential to work with an attorney experienced in this area to ensure it is properly set up and complies with all relevant laws and regulations.

By setting up a special needs trust, you can have peace of mind knowing that your child’s financial future is protected, and they can continue to receive essential government benefits while benefiting from the additional support provided by the trust.

Advanced estate planning today can give you peace of mind – knowing that if something catastrophic were to happen to you, your family would be protected by your property being distributed according to your wishes. The Schaller Law Firm can give you peace of mind by drafting a special needs trust.

5 BENEFITS OF A SPECIAL NEEDS TRUST

A special needs trust offers 5 valuable benefits to parents of a child with special needs. Here are the five key advantages:

  1. Protection from Financial Exploitation: Individuals with special needs can be vulnerable to financial exploitation. With a special needs trust, the assets are held and managed by a trustee, acting in the best interests of the beneficiary. This arrangement helps protect the assets from potential exploitation or misuse by unscrupulous individuals or organizations.
  2. Preserving Government Benefits: One of the most significant benefits of a special needs trust is that it allows your child to maintain eligibility for crucial government benefits, such as Supplemental Security Income (SSI) and Medicaid. These benefits provide vital support for medical care, housing, food, and other essentials. Without a special needs trust, an inheritance or other financial gifts could exceed the asset limits and lead to the loss of these essential benefits. By utilizing the trust, your child can still receive the much-needed assistance while benefiting from the trust’s assets.
  3. Supplemental Financial Support: The special needs trust provides an additional layer of financial support for your child with special needs. The funds in the trust can be used to cover various expenses that government benefits might not fully address, such as therapies, specialized equipment, educational opportunities, recreational activities, and any other needs tailored to your child’s unique requirements. This supplementary financial support enhances your child’s quality of life and ensures they have access to the resources they need.
  4. Professional Management: Special needs trusts are typically managed by a trustee, who can be a family member, a friend, or a professional trustee. A professional trustee has experience in managing trusts and financial matters, ensuring that the funds are handled responsibly and used for the benefit of the beneficiary. This arrangement can provide peace of mind to parents, knowing that their child’s financial affairs are in capable hands.
  5. Long-Term Planning: A special needs trust is a valuable tool for long-term planning. It allows parents to create a financial roadmap for their child’s future care and support, even when the parents are no longer around to provide direct assistance. The trust ensures that resources are available throughout the beneficiary’s lifetime, providing stability and security for the years to come.

In summary, a special needs trust offers parents of a child with special needs the peace of mind that their child’s financial future is secure. It allows for a well-thought-out plan that preserves government benefits, provides additional financial support, ensures professional management, facilitates long-term planning, and safeguards against financial exploitation. By taking advantage of a special needs trust, parents can create a stable and supportive environment for their child’s well-being and overall quality of life.

Take the Next Step …

Contact attorney Bob Schaller and schedule a FREE consultation. Zoom conference or in-office conferencing is available. Identify the how you want your property distributed.

The Schaller Law Firm drafts the special needs trust, and any other estate planning documents requested.

Attorney Schaller reviews the draft estate planning documents with you and makes any necessary changes. Then, your estate planning documents are signed, witnessed, and notarized.

You keep your original special needs trust in a safe place, like a lockable metal box or drawer in your home, safe-deposit box, or other place you store valuable papers and jewelry.  A copy can be retained by the Schaller Law Firm for safe keeping.

Celebrate knowing your estate planning documents are completed. Enjoy the peace of mind knowing your wishes will be implemented.

Complicated? You bet.

You should have an estate planning attorney on your side. Tap into Attorney Schaller’s 37+ years of legal experience. He wrote the book on client satisfaction.

FREE consultation!  Start protecting yourself and your family with a complete estate plan. Call to schedule your appointment, request an appointment through the Contact Us page, or book an appointment with the convenient online booking system.