28th Dec 2012
People make an estate plan so as to secure the financial well-being of their loved ones, be they healthy individuals or people with special needs. In fact, you can say that a will or living trust may be more important for the latter because they will have difficulty earning a living when you are gone.
However, including them in your estate plan may pose certain problems. A bequest for people with special needs may prevent them from availing of benefits under the Supplemental Security Income (SSI) and Medicaid programs. It is generally known, however, that public funded benefits cover only the minimum necessities for daily living such as food, shelter and clothing. Such benefits will not allow these people to enjoy a higher quality of living. To enable recipients of SSI and Medicaid to continue availing of their government benefits as well as avail of bequests from a benefactor, the state has allowed for the establishment of Special Needs or Supplemental Needs Trust.
As with all estate planning instruments, a Special Needs Trust should be established early on in the estate owner’s life, while he himself is mentally lucid and is not incapacitated. An important benefit of having this type of Trust established is that it enables the recipient to receive funds, gifts, bequest, settlement from legal action or similar proceeds to be transferred to the Special Needs Trust without jeopardizing that person’s eligibility for government benefits.
Generally these are created by parents of disabled children. However, any third party can still establish or start a Special Needs Trust for any disabled or critically ill person. In such a case, it is very important that the person creating the Trust should seek the advice of a competent attorney. An experienced estate planning attorney can help draft a well-written document so it can stand up to the scrutiny or “invasion” of the government agencies that provide benefits.
A Special Needs Trust is a must if you have beneficiaries or heirs who have special needs. And this is true regardless of the size of your estate or wealth. For one, the assets in the trust would not be open for plaintiffs and creditors in the event of the disabled heirs being sued for financial obligations. Moreover, the assets in the Trust are not considered as available assets for the purpose of determining eligibility for government benefits. Hence, your disabled beneficiary remains eligible for government benefits. That also enables you to use more of your money to provide a better quality of life for your disabled loved ones. So, instead of frittering away your assets on expensive private care for your disabled loved ones, this trust can enable you to conserve and maximize your assets, helping to provide your heirs with special needs with a good quality of life.