Taking care of someone who has disabilities requires thoughtful and careful planning. One legal tool that can aid you in doing so is a special needs trust. A
special needs trust (SNT) is a type of trust that preserves a beneficiary’s eligibility for needs-based
government benefits like Social Security, Medicaid and more. The benefit to having a trust is that a third-party – an entity or trustee – holds and manages assets on behalf of another person. With a special needs trust, since the beneficiary does not own the assets in the trust, they can remain eligible for benefits. This arrangement allows individuals to care for the people they love and safeguard their eligibility in the event that they pass away or are unable to provide care.
There are
three main types of special needs trusts, including:
- Third-party trust – designed to help you leave gifts or inheritance for people with special needs while protecting their government benefits.
- First-party trust – more restrictive and designed to help those with special needs who have their own assets protect those assets while maintaining eligibility for government benefits. If the person with special needs has more than $2,000 in assets, they cannot qualify for means-tested government programs like Medicaid and SSI. However, if their assets are transferred to a first-party special needs trust, they are considered exempt.
- Pooled trust – these are managed by non-profit organizations who pool money from families, donors, and others so that members (beneficiaries) can have their own account that a trustee (named by the organization) helps manage on behalf of the beneficiaries.
Below are various ways special needs trusts can open up a door of opportunity to help individuals with special needs maintain their lives.
- Medical And Health-Related Expenses:
Special needs trusts are intended to
supplement public benefits or insurance when they don’t completely cover all of your loved one’s needs, which means that one of the most important uses of a special needs trust is for
medical and health-related expenses. Depending on the individual’s circumstances, a special needs trust can cover various kinds of medical treatments, physical or mental therapies, dental or orthodontic care, prescriptions and other medical necessities when they aren’t covered by SSI or Medicaid.
- Personal Care And Assistance:
In addition to medical and health related expenses, your loved one may also require personal care and assistance for activities of daily living when it comes to using the restroom, eating, dressing, keeping up with personal hygiene, and more. They might also need help getting to and from their place of work, health checkups, physical therapy or something else. If Medicaid only covers a certain amount of hours for a caregiver weekly, a special needs trust can be used to
cover the needed excess hours. That way your loved one’s personal care needs are being met and they’re also still maintaining their independence.
- Education And Vocational Training:
Education and vocational training is another expense that a special needs trust can cover, which also plays a pivotal role in empowering individuals with special needs to maintain a regular life. When public benefits won’t cover tuition for schooling or programs, books or other education materials, courses or workshops, a special needs trust can as long as it’s being used to work towards an
occupational goal.
- Housing And Accommodation:
Housing and accommodations for your family members are likely one of your top priorities in establishing a trust. Luckily, housing is something a special needs trust can be used for, and owning a home
won’t disqualify your loved one from receiving SSI. However, before they decide whether or not to use their trust to cover mortgage and other utilities, it’s important to determine whether or not it will decrease the amount of SSI they receive a month. If they use their trust for things that SSI or Medicaid covers, it can be
deducted from their monthly benefits.
- Recreational Activities And Discretionary Expenses :
Every person deserves to partake in hobbies or activities they enjoy, and a special needs trust can help facilitate these experiences. However, it needs to be a
third-party special needs trust, as this kind of trust is meant to fund not just necessities but activities or things that will enhance your loved one’s quality of life. Whether it’s a class, membership, vacation, or more, the SNT can offer additional support for other discretionary expenses like clothing, electronic devices, and social outings.
Remember, a special needs trust is meant to
preserve and
protect Medicaid, SSI and other public benefits, so it is important that an individual with special needs avoids making mistakes that can result in their benefits being decreased or taken away. A special needs trust is intended to cover the cost of things that Medicaid or SSI cannot, so those who receive benefits should be aware of the costs that are covered and refrain from using their SNT to pay for those expenses.
Why Work With A Wills & Trusts Lawyer?
Creating and navigating a special needs trust can get complicated. There are a lot of intricate details and legalities involved in planning to ensure that your loved one will be properly taken care of. That’s why you should work with a local wills & trusts lawyer who can evaluate your situation and help create a trust that will ensure your family member’s needs will be met in the event that you become incapacitated or pass away and are no longer able to provide for their care.
Call Today For A Effective Strategy Meeting!
If you have a child or family member with special needs that you’re caring for now, it’s important to think about their care if something happens to you later. Do you have a plan? If not, Osenton Law, P.A. can help you create one. Attorney O. Reginald “Reggie” Osenton has been assisting clients with special needs planning for over three decades so he can help you understand your options, empower you to protect your loved one with tools such as trusts and government benefits, and give you peace of mind knowing your loved one’s benefits will be protected. Learn if a special needs trust is the right choice for you and allow us to address any questions or concerns you may have. Call Osenton Law, P.A. today to schedule a Effective
Strategy Meeting.
