Basic FYIs regarding a Special Needs Trust

The firm I work for frequently hosts what we call “Workshops”. They are seminars on various estate planning topics. Before each workshop we always ask the attendees, “What did you come here to learn more about?” The newest question asked at the last three or four workshops revolves around Special Needs Trusts.

So, what exactly is a Special Needs Trust (SNT)?

A Special Needs Trust is an estate planning tool that allows a parent, guardian, caregiver, or family member, to set aside funds and assets to be used for the care of a disabled person. These trusts are generally created so that the disabled person’s governmental benefits such as SSI or Medicaid are protected.

A lot of the time, having a Special Needs Trust established means the disabled person will still qualify for their government benefits, while having funds available to pay for things above basic care, like dental or eye care. It also could insure there is money in place to help pay for care if governmental benefits are cut back or extra services are needed.

Like other trusts, there are certain important details to be considered:

  1. What type of financial support would the disabled person need if I was no longer living?
  2. Where would the disabled person live if I was no longer living?
  3. Who would tend to the needs of disable child if I was no longer living?
  4. How can I protect the disabled person’s governmental benefits?
  5. Who would be in charge of the trust?
  6. What type of Special Needs Trust is best for the disabled person (ex. First party, third party, testamentary, etc.)
  7. What assets are going to pass to the disable person?

The list can go on and on.

A parent of a disabled child should meet with an experience estate planning attorney to assist with developing their estate plan. An experienced attorney will be able to evaluate your current plan, the goals for any share of your estate for the disabled child, best type of special needs trust, and other important factors.

DIY estate planning is never a good idea, but especially when dealing with a disable child.

For example, a disabled person receiving certain governmental benefits are required to meet a specific income level. If you DIY estate plan and leave a pay on death account to your disabled child, upon receiving that inheritance, they could be dropped from the governmental program because they no longer meet the income requirements.

Similarly, a common estate planning blunder many parents make is leaving their disabled child out of their estate plan altogether. They do this under the belief that by not including the disabled child, they are protecting the governmental benefits, and their other children will use their shares to continue to assist the disabled person. This is extremely flawed logic. Once a person receives an inheritance, it is theirs to dispose of however they please.

A Special Needs Trust alleviates all kinds of issues that could come up down the road. It grants the parents peace of mind to know that when they are no longer able to care for their child, there is a plan in place to care for them.

Each case is different. Each Special Needs Trust developed with be different. If you are the parent, guardian, caregiver, or relative of a disabled person, talk to an estate planning attorney today about a Special Needs Trust.

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