Special Needs Trusts
Contemplating your own mortality is frightening, especially if you are the parent of a special needs child. Routine estate planning can be daunting, but planning for the care of your child after you die can be a nightmare, and leaving an inheritance to your child can create more problems than it solves. Any parent in this situation needs the advice of an attorney who specializes in planning for special needs children to learn how best to protect the child.
If you have a special-needs child, you are entitled to certain benefits and programs that help to relieve the immense costs of your child's care. Long-term financial planning is essential to make sure that your child continues to receive those benefits when you are no longer able to provide care.
Living Trusts
A living trust, in general, is a legal arrangement whereby one person agrees to hold money (or other property) for the benefit of another. For example, when I took my son and his friends camping, each of his friends’ parents gave me money for activities and snacks. I was to hold that money and spend it on their children’s needs, with the understanding that I would return to them any part of the money that was not spent. That is the essence of a living trust - someone agrees to hold money or property for the benefit of someone else.
Special Needs Trusts
A Special Needs Trust is one that is created for a person who, because of physical or mental disability, or chronic or acquired illness, at under age 65, is receiving federal and state government benefits for medical care and daily living needs, such as Supplemental Security Income (SSI), Medicaid, vocational rehabilitation, subsidized housing and others.
Purpose of Special Needs Trusts
The purpose of the Special Needs Trust is to provide a source of funds without disqualifying the beneficiary from receiving those government benefits. An inheritance or gift could reduce or eliminate the beneficiary’s eligibility for such benefits because he or she may only have a maximum of $2,000 in his or her own name to qualify for them. With the Special Needs Trust, inherited money can be protected. It simply goes into the trust and does not penalize the individual. A beneficiary can obtain certain luxuries and other care, over and above that which the government provides, without putting eligibility for his or her government checks in jeopardy.
Contact an attorney who specializes in creating Special Needs Trusts for more information and to discuss your specific situation.
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