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Nolan Elder Law and Estate Planning, LLC Blog

Saturday, February 11, 2017

How Can a Special Needs Trust Help My Family?

If you care for a loved one who is challenged on an ongoing basis with a physical or mental disability, you know the hardships that go along with trying to ensure that they remain safe and financially secure. Careful planning must go into determining how and when assets are transferred, particularly in the event that you can no longer care for them. Without careful special needs planning, your loved one may miss out on important government benefits.

When it comes to planning your estate, it is a good idea to talk with your attorney about setting up a special needs trust. A special needs trust is a specialized planning vehicle that enables you to provide for more than your loved one’s bare-necessities, while also ensuring that they remain eligible for need-based government programs such as Medicaid and Social Security.

Types of Special Needs Trusts

There are two basic types of special needs trusts:

  • General Support Special Needs Trust
  • Supplemental Care Special Needs Trust

Most special needs trusts are supplemental care special needs trusts and are designed to provide a secondary source of income after all available government benefits have been exhausted. The funds in these types of trusts are not considered “available resources” which means they would not preclude eligibility for government benefits.

In contrast, the general support special needs trust is designed to be a primary or sole source of income for the beneficiary. This type of trust generally precludes eligibility for government benefits.

Setting Up a Special Needs Trust

When drafting a special needs trust, particular care must be paid as to how the trust is funded and how funds are distributed. Special needs trusts may be funded during your life or by will, either with third-party funds or from assets belonging to the beneficiary. It is important to note that if the trust is funded with the beneficiary’s own assets, the trust must reimburse Medicaid providers upon the death of the beneficiary.

Disbursement of Special Needs Trust Funds

Funds from a special needs trust cannot be paid directly to the beneficiary, but rather, directly to third parties providing care or other services to the beneficiary. Types of disbursements that may be made include funding for:

  • Medical and health care services not paid for by government benefits
  • Caregivers
  • Recreational activities
  • Hobbies
  • Vacations
  • Transportation
  • Education or training programs
  • Professional Service Providers such as attorneys or accountants
  • Augmentative communications equipment such as hearing aids or computers
  • Pet care or services animal care

A skilled special needs trust attorney can get fairly creative with the types of permissible benefits from the special needs trust, as they are limited only by the requirement that the beneficiary receives the primary benefit.

If you have a loved one that is disabled and you want to ensure that they are able to maintain a good quality of life when you pass, talk to an experienced special needs trust attorney today.  Nolan Elder Law and Estate Planning can help you make the best possible choices for your beneficiaries. Request a consultation today.

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