Trusts for Special Needs Individuals

What is a Special Needs Trust?

A Special Needs Trust is a trust designed to protect a beneficiary’s government benefits while providing supplemental support to the beneficiary. Additionally, a Special Needs Trust allows the creator of the trust to designate themselves or other individuals to manage the funds of the trust for the benefit of the beneficiary. A Special Needs Trust is typically created by a parent or guardian for the benefit of a child, but anyone can create a Special Needs Trust for somebody else’s benefit. While a Special Needs Trust can certainly be used to provide for an intellectually and developmentally disabled person, it can also be used to protect non-intellectually and developmentally disabled persons who are currently receiving government benefits, such as Supplemental Security Income and Medicaid.

What can a Special Needs Trust do?

As previously stated, a Special Needs Trust can be used to purchase or pay for anything that the beneficiary needs and some of what the beneficiary wants. Let’s dive into that obscure statement. What a beneficiary needs is typically related to health, education, maintenance and support. Thus, the trust can provide for any out-of-pocket medical expenses, tuition, home renovations, transportation expenses, etc. Anything that the trust purchased, such as a house or a vehicle, would be purchased through the trust and titled in the trust, therefore preventing those assets from being counted as the beneficiary’s personal assets. Now, in terms of what a beneficiary wants, this goes more into recreation, vacation and entertainment. If there are sufficient funds in the trust, a beneficiary should get the chance to go on vacation and have the trust pay for it. While there are no hard and fast guidelines, it is important for the trustee to be frugal with spending money on vacation, i.e. not taking the beneficiary to Disney World multiple times in one year. It is in the trustee’s discretion to decide what the trust should pay for regarding what the beneficiary wants.

How do you Make a Special Needs Trust?

Creating a stand-alone Special Needs Trust is one option; however, it is not the only option. If a beneficiary needs to start receiving benefits from a Special Needs Trust immediately requires creating a stand-alone trust. The alternative that most parents/guardians would find the most beneficial is to create a Special Needs Trust through their own estate plan. If the parents create their own Revocable Living Trust while they are alive, they can provide through their own trust that any inheritance received by a special needs individual is put into a Special Needs Trust that is created within their own trust. Most special needs individuals do not require a Special Needs Trust while their parents/guardians are living since the parents/guardians will be supporting the special needs individual. It is when this support goes away that a special needs individual will require a Special Needs Trust to be eligible to receive government benefits and have a trustee in place to provide for the individuals’ needs out of the Special Needs Trust.

If you have questions about creating a Special Needs Trust, contact Carpenter Law Firm. With our 40+ years of experience, we have helped numerous families protect their loved ones. Call us at 918-298-1001 or set up your free consultation today.