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Special Needs Trusts

Stephanie Pelham, RD

A Special Needs Trust can help you meet a disabled loved one’s needs and wants now and in the future. The average caregiver meets expenses and plans for a disabled loved one’s continued care. The government provides several programs that offer financial assistance. Social Security, Supplemental Security Income (SSI) and Medicaid offer funds to help pay for medical care, vocational rehabilitation, group housing, job coaching, personal attendant care, transportation assistance and more.

The government however, puts a major condition on the receipt of these benefits - none of its efforts may be duplicated. In other words, money is provided on an as-needed basis. If an individual with a disability receives funding for any of the aforementioned purposes from an alternate source, the government cuts back support.

If you are a caregiver who needs to ensure government funding for someone, you may be limited in what you can “spend” on that person – or leave to him/her as part of your estate. Funds used to place a loved one in the residence of your choice for example, can be deemed income and jeopardize their eligibility for government benefits. More significantly, so too can gifted funds or inherited assets.

This is why many people turn to a Special Needs Trust. This estate planning tool can offer an affordable way to help meet the ongoing needs of a person with a disability or to provide him/her with a substantial gift without affecting eligibility for government funding.

Federal programs provide “health, shelter, and support”. A Special Needs Trust is specifically designed not to provide funds for these purposes, but rather to supplement them. Trust funds can help pay for additional medical therapies or procedures, education, clothing, recreation, travel, guardians, transportation, vacations and other extras. Parents can also use these savings to supplement the needs of non-disabled children who are still minors.

A Special Needs Trust is irrevocable so here are a few important issues you’ll need to consider when creating a Special Needs Trust:

• Should trust funds be strictly for inclusion in your estate or also be used to help meet current expenses?

• What is the average cost of your loved ones supplemental needs (above and beyond the amount provided through government funding)?

• What level of support must you provide for other family members? You’ll need to ensure you also have sufficient funds for incorporating other dependents and beneficiaries into your financial and estate plan.

• Who should your trustee(s) be? You can designate individual, joint and/or corporate trustees.

• What limits should be placed on your own or your trustees funds?Should funds be withdrawn on an “as-needed” basis or distributed on a set payment schedule?

• What funding vehicles should you use for your trust?

The funding vehicle you select for your Special Needs Trust can have a dramatic impact on the amount available for your loved one. Investments or other financial resources can potentially multiply the value of your trust fund over the years but at the same time, today’s fluctuating market and evolving tax laws can lessen the value of these savings.

Laws vary from state to state so it is important to work with lawyers and financial planners that are familiar with your state’s laws, rules and regulations. Depending on the situation, Special Needs Trusts can be very simple or can be very detailed. Again, the advice of an estate attorney and financial planner familiar with your situation is your best resource.

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This website is an educational resource. It is not intended to provide medical advice or recommend a course of treatment. You should discuss all issues, ideas, suggestions, etc. with your clinician prior to use. Clinicians in a relevant field have reviewed the medical information; however, the Oley Foundation does not guarantee the accuracy of the information presented, and is not liable if information is incorrect or incomplete. If you have questions please contact Oley staff.

 

Updated in 2015 with a generous grant from Shire, Inc. 

 

This website was updated in 2015 with a generous grant from Shire, Inc. This website is an educational resource. It is not intended to provide medical advice or recommend a course of treatment. You should discuss all issues, ideas, suggestions, etc. with your clinician prior to use. Clinicians in a relevant field have reviewed the medical information; however, the Oley Foundation does not guarantee the accuracy of the information presented, and is not liable if information is incorrect or incomplete. If you have questions please contact Oley staff.
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