What You Need to Know About Special Needs Planning

A special needs trust is essential for protecting a loved ones quality of life and access to government benefits.

A special needs trust is essential for protecting a loved one’s quality of life and access to government benefits.

Estate planning is nothing new.  People know about the importance of having an up to date will, living will and power of attorney and most have these documents at the ready.  What if you have a child with a severe physical or mental disability and he or she will not be able to support him or herself?  How can you plan for your child’s care when you are no longer around?  That’s where special needs planning comes in.

Before consulting with an expert (this is not a do-it-yourself project) you need to organize your and your child’s financial and medical information.  Like many people, you probably have social security numbers, phone numbers, etc. in various places.  That is why it is important to have this information in an easy to access place.  Click here to see what information needs to be gathered and documented.

Once all of this information is gathered and put in one place, next comes a Letter of Intent.  While this isn’t a legally binding document, it gives information to the child’s caretaker/guardian about the child’s daily routines and specific wants and needs, such as if the child has a favorite food, type of music or television show.

Next comes a special needs or supplemental needs trust.  These trusts pay for expenses related to quality of life, such as residential treatment programs or entertainment, without cutting off access to Medicaid or Supplemental Security Income. Medicaid and Supplemental Security Income cover most of a disabled person’s expenses, but to qualify, a person can’t have assets in their name that exceed $2000, not including a home, car and personal items.  What makes a trust appealing to parents is that they aren’t considered assets of the individuals, since an independent trustee controls the distribution of funds.

There are three kinds of trusts:

  1. Testamentary or Third Party—This is either included in a Will (Testamentary) or drafted as a stand-alone Trust for future use and is funded with assets from any source other than those of the disabled person.
  2. Self-settled or First Party—This is funded using the beneficiary assets, like money from a court settlement or a gift.  With this trust, when the dependent dies and there are assets remaining in the trust, the government can get whatever is left in the trust.  Not so with a Third Party Trust.
  3. Pooled Trust—This trust is for those with limited assets.  People would put their money in with others and the trust is administered by a nonprofit organization.

Since laws for trusts vary from state to state and the trusts themselves aren’t one size fits all, it is imperative to consult with an expert in order to create the best trust possible for your child.  At Newman Elder Law, we focus on assisting families with their special needs planning. Contact us today at 267-288-5765 or submit an inquiry through our website at http://www.buckscounty-elderlaw.com/contact-and-directions/. We will be happy to send you a hard copy or electronic copy of our Special Needs Planning Guide.

Special Needs Planning Guide

Special Needs Planning Guide

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