If you are the parent of loved one of a special needs child you undoubtedly worry about your child’s future. Specifically, you may worry about what will happen to your child when you are no longer here to personally care for him or her. Thanks to advances in medicine, science, and technology, many special needs individuals can now lead amazingly independent and fulfilling lives; however, the cost of their care is often exceptional. Planning for those costs may include creation of a special needs trust.
A special needs trust, sometimes referred to as a supplemental needs trust, is a specialized trust that allows you to contribute to the care of a special needs individual without jeopardizing his or her eligibility for assistance programs such as Medicaid and Supplemental Security Income, or SSI.
One of the biggest concerns for the loved one of a special needs individual is continued eligibility for federal programs such as Medicaid or SSI. Most of these programs have very low income and resources limits – often as low as $2,000 – that prevent gifting assets directly to the recipient. In other words, if you simply gift your special needs loved one $10,000 in your Last Will and Testament, you will likely cause your loved one to lose eligibility for much need assistance from Medicaid, SSI or other programs. A special needs trust solved this dilemma.
A special needs trust operates under the same basic principal as any other trust in that it is funded by assets of your choosing and is intended to benefit the beneficiary of your choosing, in this case your special needs loved one. There are, however, very specific rules that must be followed for the creation of a special needs trust, starting with the fact that it must be irrevocable. In addition, a special needs trust must be used for “supplemental and extra care over and above what the government provides.” The idea is that programs such as Medicaid and SSI will cover costs first and then the trust will pick up what those programs do not cover.
For a special needs trust to work, it must include very specific language and comply with the federal requirements set forth relating to these type of trusts. For this reason, it is best to consult with your estate planning attorney if you think that a special needs trust is something that you want to include in your estate plan. When drafted correctly, a special needs trust can provide your special needs loved one with everything that he or she needs to live a happy and independent life ever after you are gone and are no longer able provide those things yourself.
The post Should I Create A Special Needs Trust? appeared first on Nash Nash Bean & Ford, LLP.