Fratello Law

Financial Management for Individuals with Special Needs

Estate planning is a crucial process for individuals who want to ensure that their assets are managed and distributed according to their wishes after they pass away. However, when it comes to leaving assets to a loved one with special needs, traditional estate planning may not be sufficient. In these cases, a special needs trust can be an invaluable tool.

A special needs trust is a legal instrument designed to provide financial support for a person with special needs while ensuring that they continue to receive government benefits such as Medicaid and Supplemental Security Income (SSI). These benefits are means-tested, which means that they are only available to individuals who meet certain income and asset requirements. If a person with special needs were to receive a large inheritance or gift directly, it could disqualify them from receiving these benefits.

To avoid this situation, a special needs trust can be created. The trust is managed by a trustee who is responsible for disbursing funds on behalf of the beneficiary (the person with special needs). The trustee has the discretion to use the trust funds to pay for items that enhance the beneficiary’s quality of life, such as education, transportation, or medical expenses. However, the trustee must ensure that the funds are not used to pay for items that could affect the beneficiary’s eligibility for government benefits.

When creating a special needs trust as part of an estate plan, there are several key factors to consider. First, it is essential to choose a trustee who is both trustworthy and knowledgeable about special needs planning. The trustee will be responsible for managing the trust funds and making decisions about how they are disbursed, so it is important to choose someone who has the beneficiary’s best interests at heart.

Second, it is important to fund the trust appropriately. This means transferring assets into the trust so that it has the resources it needs to provide for the beneficiary’s needs. Finally, it is important to periodically review and update the trust to ensure that it continues to meet the beneficiary’s needs. As the beneficiary’s circumstances change, the trust may need to be modified to reflect these changes.

Estate planning with a special needs trust can be an effective way to ensure that a loved one with special needs is provided for while still maintaining their eligibility for government benefits. When creating a special needs trust, it is important to work with an experienced attorney who can help ensure that the trust is structured correctly and meets the needs of both the beneficiary and the family.