What Should I Know About a Special Needs Trust?

Your disabled family member may be eligible for a number of government programs. A Special Needs Trust can make sure they do not inadvertently loose those benefits if they happen to inherit money.   However, Pauls Valley (OK) Democrat’s recent article asks “Can your family benefit from a special needs trust?” The article reminds us that these programs don’t cover everything. You may need to close the gaps.

A few government programs have eligibility restrictions, based on the level of financial assets that are available to the recipient. This means the financial help you’re wanting to provide may do more harm than good, unless you establish a special needs trust.

As the donor, you supply the funds. A trustee holds and administers them, according to your instructions. The beneficiary typically can’t use the trust for basic support or to receive benefits that can be provided by the government. The special needs trust can be used to provide specialized therapy, special equipment, recreational outings and other expenses.

When considering a this special needs trust, you’ll need to look at several issues with your attorney.  However, there are two that are critical. The first is designating a trustee. You could name a family member or close friend as a trustee. While this works well for many, it has the potential to cause family conflicts. You could also name a trust company. This company can provide professional management, expertise and continuity of administration. A third option is to name an individual and a trust company as trustees.

The second critical issue with a special needs trust is its funding. You can fund the trust during your lifetime or have it activated when you die.

Note that you don’t have to be the sole donor. This Special Needs document can be created so other family members can also contribute to it. The trust can be funded with securities (stocks and bonds), IRA proceeds, insurance death benefits and other assets.

You’ll need to understand the requirements of various federal, state and local benefit programs for people with disabilities, so that your loved one’s benefits are not at risk.

Speak with an experienced elder law or estate planning attorney about how you can to make life better for a disabled child or family member with a special needs trust.

Reference: Pauls Valley (OK) Democrat (August 1, 2019) “Can your family benefit from a special needs trust?”