Do I need to establish a Special Needs Trust?

Establishing a special needs trust (SNT) for a loved one with a disability is one of the best ways to help them financially while still ensuring they receive government benefits. Without having the knowledge or experience with this type of trust, it can be overwhelming.

If you have a loved one with a disability or special needs, it is likely that loved one is also receiving some form of assistance from the State and/or federal program, like Medicaid or Supplemental Security Insurance (SSI). These programs usually have income and asset limits that the recipients CANNOT exceed. Gifting assets to someone with a disability can result in disqualification from these vital programs. To ensure your loved one is not disqualified from the State or federal programs, you must take great care when gifting assets to the individual. A special needs trust is one solution to this problem.

WHAT IS A SPECIAL NEEDS TRUST?

This type of trust is established specifically for those with a physical and/or mental disability. Also referred to as a supplemental needs trust, an SNT is created with the needs, lifestyle, and future of the disabled loved one in mind. The trust is created to help the beneficiary receive both government and trust funds and can also serve as a protection against financial abuse by providing direction to ensure the funds are spent wisely for current and future use. This type of trust must have specific language so the assets in the trust are distributed to supplement the benefits that are being provided by the State and federal programs.

WHAT CAN A SPECIAL NEEDS TRUST BE USED FOR?

Typically, these trusts are used for supplemental items that improve the quality of life, and include paying for personal care, attendants (related to health), vacations, home furnishings, out-of-pocket medical and dental bills, education, transportation (vehicle), and rehabilitation.

Special needs trusts are complicated, but important. You should address this issue sooner rather than later. If you or your family are looking to set one up, you might want to consider meeting with a professional who specializes in special needs to ensure all of your bases are covered and the trust is setup properly. If you fail to plan and create a SNT for your beneficiary, they may lose the benefits provided by the State or federal program.

Paul B. Owens is an attorney practicing in the areas of Probate and Estate Planning law. He serves in a number of other capacities, including on the Board of Directors for the CASA Helotes Senior Center in Helotes Texas. He can be reached at his office in Helotes at 210-695-5110 or at www.PaulOwensLaw.com