A special needs trust is an irrevocable trust designed to enhance the life of an individual with special needs. The terms of a special needs trust varies per state. If you reside in Queens city, you must understand how this trust works there. I covered that topic in this article.
Special Need Trust
A special need trust is almost identical to the trust you know. However, there exist a huge difference. A special need trust is a legal arrangement and fiduciary association that allows a physically or mentally incapacitated individual or an individual with chronic illness to obtain income without diminishing their eligibility for the public assistance disability benefits provided by Social Security, Supplemental Security income, Medicare or Medicaid.
In a fiduciary relationship or association, an individual acts in the best interest of an individual or individuals to manage assets.
How Does it Work?
A special needs trusts caters for the percentage of an individual’s financial needs that are not covered by public assistance payments like Social Security and the likes. The assets present in the trust are not used to qualify the individual for public assistance, provided they are not utilized for some food or housing expenses.
Takings from a special needs trust are typically used to settle medical bills, pay caretakers, settle transportation costs, including other allowed expenses. The individual or party who sets up the trust will select a trustee who will manage the trust. This trustee will also supervise the management and distribution of funds.
Assets that the disabled individual owns that is contained in the trust may be subjected to Medicaid’s repayment rules. However, assets provided by third parties like parents are not subject to the Medicaid repayment rules. Special needs trust can also be regarded as “Supplemental needs trust.”
How can A Special Needs Trust Be of Help?
One way to prevent yourself from losing eligibility for SSI or Medicaid is to set up this trust. After it must have been set up, instead of transferring your assets directly to your loved ones, you can simply retain it in the special needs trust.
In addition, you can also designate an individual to act as trustee. This individual will know all about the trust assets and will be charged with spending money on your loved ones behalf. Since your loves ones will have zero control over the money, SSI and Medicaid admins will turn a blind eyes on the trust property for program eligibility purposes. The trust will end when it is no longer required, most times, this happens at the beneficiary’s death or when the money in the trust has been exhausted.
Setting Up a Special Needs Trust
First off, you need to set up the trust document. You don’t need the assistance of an attorney to create a simple no-frills special needs trust, and having one that you created yourself is far better than not having one at all.
If you need a personalized trust, that is one designed to your specific situation, contact our office for assistance.
In the trust document, the individual creating the trust (usually regarded as the grantor or settlor) puts property in the possession of another individual (trustee) whose duty is to manage the trust. Normally, the grantor of a special needs trust designate himself or herself as trustee and another trusted individual successor trustee.
The grantor serves as trustee until he or she dies, becomes incapacitated, or resigns at that period the successor trustee takes over. Each individual who serves as trustee is bounded by law to adhere to the terms of the trust document to use the property for the benefit of the individual (beneficiary) with special needs, designated in the trust document.
If you need help to set up a special needs trust or you have questions that you would love to ask an experienced attorney, don’t hesitate to contact our office. We boast of some of the best special needs trust attorneys and they are willing to provide you with the help you need.