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Special Needs Planning
Special Needs Trusts
If you are a care giver for a child or loved one with special needs (such as mental or physical disabilities), you probably have worried about what may happen to them when you are no longer able to provide and care for them.
While you can certainly provide that they receive money and assets, such a bequest may prevent them from qualifying for essential benefits under the Supplemental Security Income(SSI) and Medicaid programs. Oftentimes, Medicaid is the only health insurance that a special needs individual can qualify for. Government benefits only provide for the bare necessities such as food, housing and clothing. As you can imagine, these limited benefits will not provide those loved ones with the resources that would allow them to enjoy a richer quality of life. But if parents leave any assets to their child who is receiving public benefits, they run the risk of disqualifying the child from receiving them. Fortunately, the government has established rules allowing assets to be held in a trust, called a “Special Needs” or “Supplemental Needs” Trust for a recipient of SSI and Medicaid, as long as certain requirements are met. The Rhode Island Special Needs Law Center at Fabisch law, L.L.C. can help you set up a Special Needs Trust so that government benefit eligibility is preserved while at the same time providing assets that will meet the supplemental needs of the disabled person (those that go beyond food, shelter, and clothing and the medical and long term supports and services of Medicaid). The Special Needs Trust can fund those additional needs. In fact, the Special Needs Trust must be designed specifically to supplement, not replace public benefits. Parents should be aware that funds from the trust cannot be distributed directly to the disabled beneficiary. Instead, it must be disbursed to third parties who provide goods and services for use and enjoyment by the disabled beneficiary. How can the funds in a Special Needs Trust be used? The Special Needs Trust can be used for a variety of life-enhancing expenditures without compromising your loved ones eligibility such as:
How can a special needs trust be funded? As with regular estate planning trusts, special needs trusts can be funded through a variety of ways. The most common forms of funding are direct contributions over the course of your lifetime and life insurance. Because the costs of providing care that a parent may have provided during their lifetime, parents of special needs children should give serious thought to funding a special needs trust with "second-to-die" life insurance policies. These policies can be written to cover both parents, are surprisingly affordable and pay out upon the death of the second parent. Alternatively, in single parent households, such a policy could be written to cover a grant parent and a parent. Because the question of funding can be complex and involves legal, financial, insurance, and tax considerations, our office maintains close working relationships with experienced professionals in these areas to assist in funding decisions. Frequently Asked Questions About Special Needs Trusts
What Is a Special Needs Trust? Is there any difference between a Special Needs Trust and a Supplemental Needs Trust? No, in the past, some practitioners would refer to trusts special needs trusts or supplemental needs trusts differently depending on the part of the internal revenue code that governed its creation. Today however the terms special needs trust and supplemental needs trust can be used interchangeably. Why do I need a Special Needs Trust? How can I provide for my child after I'm gone? Who can serve as trustee of a Special Needs Trust? How can the funds in a Special Needs Trust be spent? Who can establish a Special Needs Trust? How can I fund a Special Needs Trust? What is a Letter of Intent? How do I establish a guardian for my child? |
