Unless you are extremely wealthy (and maybe even if you are), a "Special Needs Trust" is an essential ingredient to providing financial support for someone with a disability or special needs.
The main objective of a Special Needs Trust is to provide support for someone who is disabled, or has special needs, without harming that person's ability to qualify for Supplemental Security Income (SSI) or Medicaid.
In most cases, parents with a disabled or special needs child are much better advised to place assets to support the child in a Special Needs Trust, rather than giving them to a guardian of the child. The reason is two-fold.
In most states, a person will not qualify for SSI or Medicaid if they have $2,000 or more worth of assets.
Therefore, a Special Needs Trust has to be structured so that the beneficiary of the trust does not own or control the assets of the trust.
Rather, the assets should be controlled by the trustee who has broad, reasonable, discretion as to when and how much to spend in support of the beneficiary.
Without this broad discretion, the government could argue the trustee is required to pay for the beneficiary's care or support. The assets in the trust would then count as assets of the beneficiary, thereby disqualifying him or her from SSI or Medicaid.
A Special Needs Trust should supplement SSI or Medicaid, by providing financial support for certain living expenses; not supplant those programs.
Well-intentioned, but ill-informed, parents or grandparents, sometimes leave assets to a disabled or special needs child or grandchild; thereby disqualifying him or her from SSI or Medicaid. This can cause more harm than good for the beneficiary.
One other factor to keep in mind is that increasing numbers of people are now being diagnosed with a progressive neurological conditions -- such as Multiple Sclerosis, Parkinsons Disease, and Alzheimer's Disease. These conditions often begin mildly but progress to full-fledged disabilty. So, it is essential to ask the neurologist what to expect from the future progression of the disease. If the outlook is for disease progression, a special needs or Disability Trust should be considered.
The bottom line is that if you are considering leaving assets, from your estate, to someone who qualifies, or may qualify, for SSI or Medicaid – you must get advice from a qualified estate planning attorney. Make sure she or he has experience drafting Special Needs or Disability Trusts.
You can get more information about special needs trusts trusts and medicaid qualification issues at Medicaid Secrets. You also can ask specific questions at living trust questions or (for a small fee) at:
Here's some resources to hire your own trust attorney.
If you live in the state of Washington and need support dealing with a special needs child and his or her mental, emotional, or behavioral issues, you should check out SAFE Washington. SAFE Washington is dedicated to supporting special needs families through a network of family organizations in Washington state.
Here’s an article about Special Needs Trust Issue.
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