You need to take practical and legal steps to plan for your child's transition to…
Trusts are created when someone or a company manages property or assets on behalf of another. The person or entity is known as the trustee and has the responsibility of making decisions in the best interest of the trust beneficiary. Trusts are advantageous because they allow you to place conditions on how and when your assets will be distributed when you die, reduce estate and gift taxes, and skip the lengthy and expensive probate process.
Special Needs Trusts
Special needs trusts are a class of trusts made specifically for the benefit of those with physical or mental disabilities. These differ from a typical trust due to the unique terms and conditions necessary to accommodate the specific needs and lifestyle of a beneficiary with disabilities. The trust is also designed to protect eligibility for government benefits due to increased assets.
Naming Your Trustee
Choosing the right trustee for a special needs trust is extremely important, and the trustee must be someone you are certain will act in your loved one’s best interest after your death. Often, it’s a trusted family member who knows the beneficiary and their needs. However, if your situation doesn’t allow for this, the court will appoint a third party to manage the trust according to your written wishes.
Protecting Government Benefits
The trustee has complete control over the assets in the trust instead of the beneficiary. For this reason, government programs such as SSI and Medicaid ignore those assets when determining eligibility. Many people are unaware of this and make the mistake of distributing their assets to a loved one with special needs through a will. This could cause them to exceed the asset limits for SSI or Medicaid and jeopardize their benefits.
Special needs trust may also be set up to hold the proceeds from a legal settlement on behalf of the person with special needs. This is important to ensure a financial windfall doesn’t negatively affect government benefits eligibility. Also, if the person with special needs is the one being sued, the funds in the special needs trust are protected from being paid out in damages.
Elder Law and Special Needs Attorneys Help Create Your Trust
Even if you believe your loved one with special needs will never need government benefits, it makes sense to consider a special needs trust. Special needs trusts can provide unique support to the beneficiary in ways that other types of trusts can’t. They may require a lifetime of caregiving and financial assistance should something happen to you. Eventually, they may need to apply for government benefits, and they’ll be glad you provided them with options.
Special needs trusts can be difficult to set up, so consult an elder law attorney or special needs attorney who can examine your specific situation and make sure your loved one is taken care of for years to come. If you would like to speak with an elder law or special needs attorney regarding your situation or have questions about something you have read, please contact us at (212) 252-1212. We look forward to the opportunity to work with you.