Special Needs Trusts

from the e-newsletter of Rosi & Gardnew PC, 6/15/15

Families that include a family member with a disability should consider, as part of their estate planning the establishment of a Special Needs Trust.   A Special Needs Trust can both (a) provide funds for the long term care of the person with a disability and (b) avoid the possible loss of governmental benefits as may now exist or be established in the future.

Quite regularly we learn about the expanding scope of disabilities that may affect our loved ones. Although these individuals may have the ability to receive Supplemental Security Income (SSI), Veteran s (VA) and Medicaid benefits, family members may want to supplement those benefits.  

Unfortunately, without careful advance planning such generosity may jeopardize some or all of those benefits. Setting up a Special Needs Trust is one option. The trust may be established inter vivos (during one's lifetime) or testamentary (in the benefactor's will). Under provisions established by the congress in 1993, the Social Security Operations Manual authorizes the use of Supplemental Needs Trusts for individuals under the age of 65 to hold assets not otherwise countable when determining applicable benefits to which the disable person may be entitled.

By placing assets in a Special Needs Trust where a trustee with complete discretion regarding the management and use of the assets and income - not the disabled person - has control over the trust assets we expect that SSI and Medicaid will not take into account the trust assets in determining benefits. The trustee's powers are limited to the extent that he or she may not give money directly to the disabled person (the Ward of the Trust). However, the trustee is free to purchase a wide variety of goods and services for the individual including living accommodations, personal care attendants, out-of-pocket medical, dental and rehabilitation expenses, education, motor vehicles and recreation including vacations.

Special Needs Trusts are not only for the well to do.  There are many non-profit entities that have established pooled special needs trusts. These entities pool the resources of many contributors to provide benefits to several beneficiaries. Pooled trusts have some benefits not available to individual trusts that merit consideration when deciding on at trust.

The preparation of a Special Needs Trust requires the professional evaluation of the family resources and the applicable federal and state laws to minimize the potential adverse impact of those laws. To learn more please give us a call at 231-941-5878.