If You’re Thinking About a Special Needs Trust, Read This


Sisters taking care of disabled brother on beach

Sisters taking care of disabled brother on beach

If you are the parent or other caregiver for a person with a serious medical or physical disability, you may find yourself wanting to financially assist and support your loved one. But this can create problems if your loved one receives government benefits, such as MediCal or Social Security Income (SSI). Because these government programs provide benefits based on the financial needs of the beneficiary, eligibility is based on strict income and asset qualification requirements. This means that providing financial assistance to a family member with special needs must be done in a way that will not interfere with the person’s eligibility for government benefits.

The dilemma faced by those with family members and loved ones with special needs is rooted in the limited benefits available through these government programs. While SSI and Medical may provide limited benefits to obtain basic necessities like medical coverage, clothing, housing and food, they are generally not adequate to provide for all of a disabled person’s needs nor do they cover anything other than the absolute basic essentials. When you want to provide financial gifts that will allow a family member with a mental or physical impairment to maintain a higher standard of living, the support must be provided carefully so that it will not be considered as additional resources that will disqualify the recipient from government benefit programs.

At the Law Office of Newell & Havens, we routinely work with families of those with special needs to address these issues. An effective estate planning tool for addressing this problem is a Special Needs Trust, also often referred to as an SNT. If the SNT meets the strict requirements established by the government, assets can be held in this type of trust for the benefit of those receiving SSI and Medical benefits while at the same time maintaining their qualification for continued receipt of government assistance.

Some families that have considerable financial resources assume that they do not need a Special Needs Trust. However, this form of trust can provide a number of advantages, even for wealthy families.

Benefits of a Special Needs Trust:
1. Protection from creditors
The trust can provide protection of the assets placed in the trust from the creditors of the special needs beneficiary. If the disabled family member is sued, the assets placed in the SNT will generally be beyond the reach of the judgment creditors.

2. Provide better quality of life
The assets can be used to promote a higher standard of living for the beneficiary of the trust because the assets are not counted as available assets for purposes of calculating eligibility for government benefits. The assets can be used to provide advanced medical equipment, appropriate furniture and appliances, educational development, or recreational activities.

3. Protection from disqualification of government assistance
Oftentimes, MediCal is the only viable source of medical assistance for your special needs loved one. Disqualification, even done inadvertently, may put the recipient at risk of losing medical coverage they are more likely depending on for their daily needs. It may also require that the resources provided to them be spent down and then a new application for the government benefits may be required.

The technical requirements for setting up a SNT must be adhered to strictly so that the government cannot pierce the protection of the trust. While the beneficiary has no immediate control of or access to the assets in the trust, the trustee who oversees the trust has discretion to make distributions to the beneficiary consistent with the terms of the trust.

There are many more legal requirements that must be considered when drafting a SNT in addition to those discussed above. It is very important that you discuss your particular needs and circumstances with your Estate Planning attorney.

At our Glendora, California, Estate Planning law firm, we understand the concerns parents and other family members have with providing the highest quality of life to special needs loved ones. If you have California estate planning questions, we invite you to call us at (626)335-6884, or email us : info@GlendoraLaw.com to learn how we can help.

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Newell & Havens Attorney At Law is a full service law firm, who can help you in your Estate Planning cases. Call for a free assessment of your needs in Glendora, CA.

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