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What is a Special Needs Trust? A Special Needs Trust is a special kind of trust which can hold cash, personal property, or real property. A Special Needs Trust can also be the beneficiary of life insurance proceeds, proceeds from a will, or proceeds from a civil litigation suit. These things are held for the benefit of a child or adult who has a disability. The Special Needs Trust can be used to provide for the needs of a disabled person to supplement benefits received from various governmental assistance programs including SSI and Medicaid. Why do I need to establish a Special Needs Trust? If a Special Needs Trust is not created for a person who is disabled and receiving public benefits, then the money or property they receive will be counted when computing their income This extra money may put them over the income eligibility requirements and they can lose their public benefits. A Special Needs Trust prevents this money from being counted for purposes of public benefits. Why are Special Needs Trusts are important? They protect government benefits eligibility. The Special Needs Trust allows and individual with disabilities to have funds available for his or her benefit without the funds counting as a financial asset for benefit eligibility purposes. Who can establish a Special Needs Trust? Parents (or other family members) of a disabled child can establish a Special Needs Trust as part of their general estate plan. The parents can "pour-over" that child's share of their estate into this Special Needs Trust and not to worry that their child will be prevented from receiving benefits when they are not there to care for the child. A disabled person who expects an inheritance or other large sum of money may establish a Special Needs Trust. Receipt of these funds might otherwise disqualify them from public benefits. Who will manage the Special Needs Trust assets? The manager of a trust is called a "trustee." It can be any person over eighteen years of age, a bank, a financial planner, CPA, or a professional fiduciary. The trustee holds, administers, and distributes all property allocated to the trust for the benefit of the disabled person during their lifetime. Who can serve as trustee? In most circumstances when a Special Needs Trust is established by parents for the benefit of a disabled child, those parents serve as the trustee until they die or become incapacitated. When that occurs, a person selected in advance by the parents or person establishing the trust continues to serve according to instructions contained in their trust. Can the disabled person serve as trustee? No. The whole premise of a Special Needs Trust is that the disabled beneficiary shall not be considered to have access to principal or income of the trust. The assets of the trust are for the benefit of the disabled person. However, the disabled person has no power or authority to direct the payment of funds. What is placed in the trust to establish it? Any kind of asset may be held by the trust. Holding title by the trust is a simple process of putting the title to that asset in the trust's name. Many times a trust has no assets put into it until the death of the settlor. The Special Needs Trust in that case is an empty shell waiting for a future event. It is prudent to place some assets into the trust and begin using the trust immediately, but it is not required. Can additions be made to the trust? Yes. Additional property may be added to the trust at any time. Additions may be made by gifts during life, by will or living trust, by life insurance policies, employee plan benefits, or retirement plan benefits. Can a Special Needs Trust be used by recipients of settlements or personal injury awards? Yes. The court may authorize the creation of a Special Needs Trust where a minor or disabled person is to receive funds pursuant to a compromise or court judgment. The assets are not deemed available for purposes of public benefits eligibility. The trust protects the award for use in the future for the special needs of the disabled person Want a workshop on Special Needs Trust Call to set up a workshop today Lester J. Robinson 300 Corporate Parkway Suite 216 N Amherst, NY 14226 716-276-1168 email: lesterrobinson@finsvcs.com |