Special needs trusts, also called supplemental needs trusts, can be a very important estate planning tool for parents of children who are likely to need special care and financial support throughout their lives.
Special needs trusts answer the question of how to pass on assets to a disabled child without jeopardizing his or her eligibility for means-tested government benefits like Medicaid, Medicare and Supplemental Security Income. In fact, disabled individuals with as little as $2,000 in available assets may not be eligible for some public programs. However, assets held in special needs trusts don't count toward eligibility calculations for public benefits.
The money in a special needs trust can go towards items not covered under government programs. This can include dental work, eyeglasses and caregiver charges. It can also be used to pay for enrichment—such as trips to visit family members and specialized educational programs.
An experienced estate planning and elder law attorney should draft the special needs trust. This should be an attorney who knows and works in special needs planning and government benefit programs for the disabled. A poorly drafted trust can lead to serious consequences for disabled beneficiaries.
These trusts are often created when a disabled child reaches the age of maturity. At this time, parents have a better idea of the type of support available to the child and whether he or she will be financially independent, have the mental capacity to make financial decisions, and have the ability to live independently.
Choosing a trustee (or co-trustees) to be in charge of a special needs trust is also a big decision. Trustees are required to act in the best interest of disabled beneficiaries. They also should be able to understand and comply with trust administration rules and guidelines. Parents should also select a trustee who knows the disabled child and is willing to comply with their wishes for that child. These can be detailed in a letter of intent that accompanies a special needs trust. Trustees are usually family members who care for a disabled relative after his or her guardian dies, but sometimes these trusts are managed by corporate trustees.
The care for a disabled child can create a significant impact on one's financial resources. Remember that special needs trusts are not just for the wealthy; anyone in this situation can create one. We can offer creative ways in which these trust can be funded throughout your lifetime. Be certain that family members are aware of the trust's existence and that their own financial plans are coordinated with the trust so that the child doesn't receive assets in his or her name that would make him or her ineligible for government benefits.
Call us at 757-259-0707 or better yet, visit our website where you can quickly and easily schedule your complimentary consultation. Together, we can work to ensure you have the peace of mind that your special need child will be provided for even after you're gone.
Reference: CNBC (June 1, 2016) "Special-needs trust is key part of some estate plans"