What are special needs trusts?
A trust is created when any property (real estate, finances, and/or tangible items) is managed by a person, called a trustee, for another person’s benefit, the beneficiary. Special needs trusts are made specifically for the benefit of disabled or mentally ill beneficiaries. The trust is created with the specific needs, lifestyle, and future of the beneficiary in mind.
What are the benefits of special needs trusts?
Special needs trusts can provide for a loved one’s needs while not interfering with their ability to collect government aid. Special needs trusts can also be used to set up inheritance funds or proceeds from a settlement on behalf of the disabled person. This way, if your loved one is the plaintiff in a successful lawsuit or inherits assets, those funds will go into the trust and will not disqualify him or her from receiving those government benefits. On the flip side, if the beneficiary is ever sued, the funds in his or her special needs trust are protected from any judgments.
Will a Special Needs Trust Affect a Loved One’s Ability to Receive Government Aid?
Special needs trusts could jeopardize your loved one’s ability to receive Supplemental Security Income (SSI) and Medicaid benefits if not planned carefully. Owning a house, a car, furnishings, and normal personal effects does not affect eligibility for SSI or Medicaid. But other assets, including cash in the bank, will disqualify your loved one from benefits. So setting up a special needs trust that does not exceed the asset limits for your loved one will ensure that their ability to receive government aid is not affected.
How Special Needs Trust Funds Can Be Spent?
The trustee does not give money directly to your loved one, but can spend trust assets to buy a wide variety of goods and services for your loved one. Special needs trusts can pay for personal care attendants, vacations, home furnishings, out-of-pocket medical and dental expenses, education, recreation, vehicles, and physical rehabilitation, all without affecting your loved one’s ability to receive government aid.
Will You Need a Lawyer?
Anyone can create a special needs trust, as long as the required language is included. You can create a special needs trust without an attorney. However, if you want to avoid any pitfalls of creating and funding the trust, an attorney will be invaluable. Having an attorney on your team will provide immense support when establishing your special needs trust. There are many legal requirements and details essential to the process, and a probate attorney will be able to provide you with services that are well worth the efforts for your loved one.
If you have questions about special needs trusts, contact the experienced probate and trusts attorneys at Christopher B. Johnson today!