If you’re a parent of a disabled child or caring for someone with special needs, there is often little time to think about how your loved one will get by in the event that something happens to you. Still, that is something that must be considered if you want to ensure that he or she is properly cared for when you are gone. And while it is common for many people in your situation to just assume that your last will and testament should be all that is needed to secure that child’s future, things are rarely that simple. In fact, without adequate planning, you may find that your will actually ends up causing even more problems for your disabled beneficiaries. To avoid that, you should consider a special needs trust (SNT).
What is a Special Needs Trust?
A special needs trust is a very specific trust designed to ensure that the beneficiary is able to receive his or her inheritance without affecting eligibility for needs-based government benefits like Supplemental Social Security and Medicaid. When a disabled person simply receives direct access to an inheritance, those assets are taken into account when the government determines that person’s eligibility for various forms of governmental assistance. Obviously, gaining access to a sizeable sum of money or property could cause a disruption in that disabled person’s access to those benefits, since SSI has an individual asset ownership limit of $2,000.
A special needs trust is structured to provide supplemental funding for the beneficiary’s ongoing needs, but without providing him or her with direct ownership of the assets. That preserves program eligibility, while also providing the extra money a disabled individual often needs for medical expenses, dental coverage, and similar costly expenditures.
How Prevalent is the Problem?
The 2000 U.S. Census identified nearly 21 million families as having at least one disabled family member in the household. Many of those disabled persons are children, but the vast majority of all disabled family members require at least some level of assistance with daily living. The more than 2.8 million disabled children identified in that government survey represent a special concern for not only their parents but for policymakers and society as well. Often times, the medical expenses involved in caring for someone with special needs can be so extravagantly high that it impacts these families in ways that most people have trouble grasping.
And while parents who care for disabled children often face financial struggles that make it difficult to amass the type of assets typically associated with complex estate planning needs, that does not negate the need for such planning. It does, however, suggest that even more care must be taken during the development of strategies to provide for disabled loved ones in ways that maximize the estate’s value to those surviving beneficiaries.
What Issues Can an SNT Resolve?
By setting up a special needs trust for your disabled child or other loved ones, you can help to resolve some of the most serious issues they might otherwise face as a result of their own unique financial needs or by virtue of the money they might receive from a standard bequeathal.
• As noted above, there are a variety of asset limitations placed on the needs-based programs on which many disabled individuals rely. When a qualifying individual receives an inheritance, monetary or property gifts, or even personal injury settlements, those new assets could cause him to lose his benefits. An SNT is structured to avoid that outcome.
• This type of trust is the best way for the parent of a special needs child to ensure that the child’s inheritance is managed in a way that provides lasting benefits. That can help to avoid situations in which the beneficiary is unable to properly manage the inheritance, which can result in the money not achieving its optimal benefits.
• As generous as some people might believe government programs to be, there are some things that they simply do not do. For example, SSI and Medicaid do provide some minimal level of assistance for the disabled and – in the case of Medicaid – many of the poorest in society. They do not typically provide for all necessities, however. Certain medications, prescription eyeglasses, and dental care are outside of that coverage.
There are also a wide range of services such as vocational and educational training that the disabled person must pay for without government assistance. Finally, simple necessities such as furniture and household items, clothes, and hygiene items are all things that neither Medicaid nor SSI reimburse. An SNT can provide the supplemental income many disabled persons need just to make ends meet.
• That extra assistance provided by an SNT can dramatically reduce the stress experienced by many disabled individuals as they struggle with the demands of daily living. It can help to pay for those creature comforts they might otherwise be denied, and do so in a way that places the minimum amount of pressure on their money management skills.
• SNT planning can be useful for almost any family that wants to ensure that a disabled loved on is properly cared for in the future. While it is almost an essential option for high-income families who need a secure vehicle through which they can pass on wealth to their disabled children, it can be equally useful for low-income families struggling to figure out how their special needs children will survive when they are gone.
Estate planning is complex even in the best of circumstances. For families who also need to provide for the wellbeing of someone with special needs, the development of an effective strategy for managing financial assets after death can be an almost insurmountable challenge. Fortunately for families in Florida, Robert J Kulas Attorneys at Law can help to make these complex issues more manageable. If you need to make sure that your disabled loved one will be cared for financially after you pass away, contact us today to learn more about how a special needs trust can benefit your asset planning needs.
