A special needs trust for the benefit of special needs children | Tour |
A special needs trust, sometimes called a “supplemental needs trust”, makes it possible to appoint a trustee to hold property for the benefit of your disabled or special needs child after you’re gone. A special needs trust provides for the needs of a disabled person without disqualifying him or her from benefits received from government programs such as Social Security and Medicaid. Government Benefit Requirements In order to qualify for the Social Security Administration’s Supplemental Security Income Benefits” (“SSI”), a disabled or special needs adult can’t hold more than $2,000 in assets, excluding a car and a home. SSI benefits, which average about $400 per month, must be spent on food, clothing and shelter expenses. Eligibility for SSI makes a disabled or special needs person eligible for food stamps and Medicaid, which pays medical expenses, nursing home care and mental health services. Medicaid eligibility also makes a disabled or special needs person eligible for many local community services, as well.As these benefits add greatly to a disabled person’s ability to care for him or herself, you wouldn’t want to give your disabled child property that would disqualify him or her from receiving these benefits. Bequeathing To Other Family MembersWhile it might seem like a good idea simply to leave a set amount of money to your disabled or special needs child’s sibling or other close relative, with the understanding that the money will be spent on the disabled child, this often backfires: The money can fall prey to judgments or divorce settlements against the relative, or can be lost in bankruptcy The relative can’t be legally forced to use the money to benefit the disabled or special needs person The relative to whom the money is left may be taxed at a higher rate than the disabled child or a trust Should the relative die before the disabled or special needs child, the money would go to his or her heirs. A special needs trust avoids these potential problems without putting an emotional strain on family relations. Monthly SSI benefits can be spent on food, clothing and shelter. The special needs trust money can then go toward little extras that make your disabled child’s life more rewarding, such as: Summer campAirline tickets for travel Electronic video games Vitamins and grooming supplies Special needs trust money can also be spent for final funeral and burial expenses. Picking a Trustee The trustee for a special needs trust for your disabled or special needs child could be: A trusted family member who’s close to your child Special Needs Trust Language To be effective, a special needs trust document: Funding A Special Needs Trust A special needs trust can be funded through a will or gifts from relatives and friends made directly to the trust instead of to your disabled child. Many special needs trusts are funded through “survivorship” or “second-to-die” life insurance policies that cover both parents and pay out on the death of the second parent. When your disabled or special needs child is to receive an inheritance or money from a lawsuit, it’s a good idea to set it up ahead of time in what’s called a “self-settled trust,” to avoid losing Medicaid eligibility. A parent, grandparent, legal guardian or court can establish the trust, with any money left after your child’s death going to the state. Letter of Intent One way to be clear about what you intend for your disabled or special needs child’s future is to make a “Letter Of Intent” to be given to his or her trustee at the time of your death. This document gives family members and others the benefit of your knowledge about your child’s capabilities, needs and fears, and can be updated periodically. A letter of intent can include: Biographical info |
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