When you have loved ones in your life with special needs, they require extra care and attention in order to provide for those needs. Special needs, broadly defined, are needs that arise from a significant disability, usually medical or psychological in nature. It could be a physical disability such as blindness or a mental disability such as Down Syndrome. Whatever the case, special needs require special attention. Families frequently must balance numerous aspects of their finances in order to avoid disqualifying themselves from disability-based government benefits while also being able to continually afford the care their loved one with special needs requires. This means that careful attention must be paid when designing an estate plan that involves someone with special needs. One of the most important planning tools for families with special needs is the Special Needs Trust. In today’s blog, we will provide answers for some common questions about these trusts and their purpose. What is a Special Needs Trust? Also known as a supplemental needs trust, it functions similarly to most trusts in that it is set up by a grantor who places property to be held in trust which is later distributed to a beneficiary based upon the specific terms of the trust and instructions of the grantor who created the trust. The trust is administered and the property is distributed to the beneficiary by a trustee who is also designated by the grantor. What is the purpose? Special needs trusts are specifically meant to allow you to leave property to a loved one with a disability without compromising their eligibility for government-based assistance. Programs such as Medicaid—which provides for the healthcare needs of those with special needs—and Supplemental Security Income—which provides monthly financial stipends to people with disabilities—have income and asset limits. If the beneficiary of these benefits has too much income or assets, they will not be eligible to receive the benefits provided by these programs. How does it work? Rather than leaving assets directly to a disabled loved one upon death, the grantor leaves the property to a Special Needs Trust with the disabled loved one as the beneficiary. The grantor will designate a trustee to have full control over the trust funds. The trustee will then use the funds to provide for the beneficiary’s needs. The trustee cannot give money directly to the beneficiary since that would compromise their eligibility for government assistance, but they can use the funds to buy goods and services that the beneficiary wants and needs. These could include vacations, home furnishings, education, and much more. The grantor can dictate exactly how the funds are to be used, ensuring that their loved one receives the financial assistance they need even after the grantor is gone. How long does it last? A Special Needs Trust will last as long as the special needs beneficiary has need of it. Generally, the Trust will terminate upon the death of the beneficiary or the depletion of the funds. If you have more questions about Special Needs Trusts which have not been answered in this blog, or if you are interested in setting up a Special Needs Trust for a loved one, please contact the Law Offices of John Mangan, P.A. today.
