If you have been researching about securing the future of your children with special needs, spending a lot of time with other parents who are in a similar situation as yours or reading various articles about estate planning for special needs, you must have gotten the idea of putting a portion of your estate in a special needs trust (SNT).
A special needs trust or a supplemental needs trust is a trust that holds assets for the benefits of a disabled beneficiary and allows them to enjoy it in their time of need. The beneficiary also gets to benefit from government benefits that are needs-based.
With a SNT, you don’t have to worry about your child with special needs to lose any necessary services because of not being able to fulfill some specific income requirements. Here are some basic tips to start a supplemental needs trust for your children:
Understand the Importance of a Supplemental Needs Trust
With a supplemental needs trust, you as a caregiver or a parent will be able to set a portion of your estate aside so that your loved one with special needs or some sort of disability can have a secure future. You also get to protect the benefits provided by the U.S. government for your children. The benefits mainly include Medicaid and Supplemental Security Income.
These benefits are essential and help provide the income and healthcare required to provide maximum support to the individual in need. However, when it comes to receiving government benefits, there are some terms and conditions involved. Inheritance, settlement money or monetary gifts can cancel the eligibility of your child to receive these benefits. This might result in your child not having enough monetary resources to support their personal lifetime necessities.
Select the Right Type of Supplemental Needs Trust
The trust you select for your child with special needs to have depends on who is directing the money in the trust; your child or you. Typically a third party such as a relative (usually a parent) funds a supplemental needs trust and the process is interconnected with the estate plan of the family. In such case the grantor leaves a portion of their assets in the trust and the trust holds those assets for the benefit of the special needs beneficiary.
Unlike supplemental needs trust, pooled disability trusts are self-funded by the disabled individual. They typically do so through inherited money or an injury award. Expenditures similar to that with the SNT can be carried out with pooled disability trusts. It is essential that a nonprofit corporation sets up and manages the pooled disability program and it does so in the exact month when the money was received for the protection of the benefits.
If the beneficiary passes away, the supplemental needs trust isn’t required to reimburse any money to the state. However, the pooled disability trust needs to pay back as much amount as possible to Medicaid.
An organization or an individual can be designated by the principal to collect any remaining monetary funds. The money protected in both the trusts can be utilized for things such as buying hearing and mobility aids, spectacles, travel, recreation, clothes, furnishings and transportation.
Hire an Estate Planning Attorney
A financial planner, case manager or an estate planning lawyer can guide you through the process of fulfilling the long-term monetary requirements of your child with special needs. When it comes to legal issues, the rules and regulations keep updating time to time, therefore it’s best to hire professional help for your guidance.Appoint a Trustee
A supplemental needs trust as well as a pooled disability trust, both require you to designate a trustee who is capable of managing and investing the trust funds and making the necessary disbursements that are always in the best interest of the beneficiary. Additionally, that trustee will also have to report to government agencies and authorities that provide the benefits and also stay updated and informed about the constantly modifying law regulations.
Appoint an Advocate
When it comes to a supplemental needs trust, it is important for the principal to designate an advocate who is not only close to the individual receiving the benefits but who also understands the wishes and needs of the donor and the beneficiary respectively.The advocate actively works to determine disbursements and help maintain the best possible quality of life for the individual with special needs. The donor is required to fill forms and provide details instructions as to whom they want the advocate to be and how they wish for the beneficiary to be cared for.
