Estate Planning For a Family Member With Special Needs
If you have a loved one with special needs, you may be wondering how to provide financial help for them after you pass, knowing that it will be difficult for them to provide for themselves. While Supplemental Security Income (SSI) is available to people with special needs, it provides the bare minimum for food, shelter and clothing. Beyond that, additional financial security and a better quality of life is usually dependent on what family members can currently provide or leave behind when they pass.
Many people with family members that have special needs wish to help with their long-term care and overall quality of life through gifts or by providing for them in their will. While done with good intentions, this will almost always do more harm than good for the person with special needs. Why? A gift or inheritance will likely make a person ineligible for crucial government benefits.
Many government benefits programs, including (SSI) and Medicaid, are needs based. This means that a person’s total countable assets must be below a strict asset limit set by each state to qualify for benefits. Even the smallest inheritance or gift will likely make a special needs person ineligible for benefits necessary for food, shelter, clothing, and long-term care needs.
The Solution? A Special Needs Trust
The best and most effective way to provide for a special needs person is through a special needs trust. A special needs trust will not affect a person’s eligibility for SSI or Medicaid because the money is placed in the trust and not considered available to the special needs person. However, the money in the trust will still be used to provide for the special needs person through a trustee. A trustee is someone who can access and handle the trust funds. The trustee is generally a trusted family member, the trust creator, or a professional trustee. They must act in the best interests of the special needs person and can only use trust funds for the benefit of the special needs person. The special needs trust can be used for virtually anything as long as it benefits the special needs beneficiary. Therefore, SSI and Medicaid will cover basic food, shelter, clothing, and long-term care needs, while the special needs trust can be used for vacations, transportation, education, activites with friends, games, or anything that enhances the quality of life of the special needs beneficiary.
A special needs trust is a valuable tool for anyone with a special needs family member. This type of trust is necessary for a person with special needs to receive important benefits without being impoverished. There is a misconception that trusts are only for wealthy families. A special needs trust can be set up with any amount of money, can have additional money added over time, or can have money put into it when the trust creator passes away.
Types of Special Needs Trusts
Third Party - A third party trust is one in which someone other than the beneficiary puts money into the trust. For example, the parents of a special needs child put money into a trust for their child.
Self-Settled - With a self-settled trust, the beneficiary puts their own money into a trust. This money could be from a lawsuit or personal injury claim, a workers’ compensation claim, or an inheritance.
Pooled - A trust created by a non-profit which a disabled or special needs person can join.
If you would like more information on how to provide a better quality of life to a loved one with special needs, or would like to set up a free consultation, call me today at 800-841-0065 or email me at dakota@warnerlawfirmpllc.com.
