When a loved one is disabled and unable to manage his or her financial decisions, many turn to a special needs trust to ensure they can care for their loved one financially.
A special needs trust allows a disabled individual to receive additional financial support without harming his or her eligibility for state and federal government benefits, such as Supplemental Security Income (SSI) and Medicaid. The assets placed in a special needs trust are not counted when applying to qualify for governmental assistance and thus are a strong option for those with special needs.
It’s important to note that the funds in a special needs trust must be spent solely for the benefit of the disabled individual. Funds in these trusts should only be used to purchase necessary items for caring for the disabled individual, such as purchasing a customized wheelchair or a computer to improve cognitive abilities. These purchases are considered non-countable and do not impact SSI and Medicaid eligibility.
Similarly, special needs funds should not be spent on other family members or goods or services not specifically designated for the disabled individual.
How do I set up a special needs trust?
Although special needs trusts no longer require court approval, they do require governmental approval such as trust accountings. Special needs trusts are also required to include a payback provision which states that upon the death of the disabled beneficiary, the remaining trust funds must reimburse the state Medicaid program for any benefits it paid to the disabled individual during their lifetime. Without this provision, a special needs trust will be denied.
It is important to work with an experienced estate planning attorney if you need a special needs trust to ensure your loved one’s eligibility for other state and federal government benefits. The right attorney will verify the necessary language is included within the trust documents so that your loved one’s assets are properly protected.
If you want to create a special needs trust for a loved one, consult with our experienced estate planning attorneys by calling 856-782-8450 or visiting www.timriceelderlaw.com.