Understanding a Special Needs Trust

Jan 30, 2023


If you are providing support and care for a loved one with special needs, it is only natural to worry about their future. Making sure your loved one is taken care of is crucial. How can you ensure they are still taken care of when you are no longer around? A Special Needs Trust is an estate planning option that could be the solution you are looking for. Let’s discuss a Special Needs Trust and how creating one can benefit your loved one with special needs.

Special Needs Trust

A Special Needs Trust is a revocable trust designed to make sure someone with a disability receives their inheritance while remaining eligible for government assistance programs. Currently an individual can only have $2,000 of assets or resources to qualify for Social Security Income (SSI) or Medicaid. Assets in the Special Needs Trust can be used to care of your loved one without making them ineligible for government sponsored assistance programs.

How It Works

Your revocable trust will have a Special Needs Provision for your loved one, also known as the beneficiary. While you are living, you are the person in control, known as the trustee. When you pass away, your trust will become irrevocable, meaning that it cannot be changed. At that time, the person you chose to be trustee will then take over control of your trust. The trustee must follow the rules you laid out in your trust, including the special needs provision.

The trustee can use assets from the trust to give your loved one the maximum amount they are allowed to receive per month without causing them to lose their assistance. They can pay for a wide range of goods and services including education, recreation, physical rehabilitation, personal caregivers, and medical expense not covered by assistance. The trustee is also allowed to buy assets in the name of the trust, so the assets do not count towards your loved one’s asset limit.

Assets of the Trust

For your trust to work as intended, it is important that all of your assets are in the name of your trust. Your trust should own everything, so you do not own anything personally at the time of your death. This will ensure that your estate can avoid the probate process and your loved one with special needs will not inherit anything outside of the trust that could jeopardize their benefits. Also it is important to note, assets of the trust are protected from creditors trying to collect from your loved one.

Choosing a Trustee

When choosing someone to take over your responsibilities as trustee, it is important to appoint someone you can trust and rely on. The trustee’s responsibilities will vary depending on the details of the trust. Here is a list of the common responsibilities for a trustee in a Special Needs Trust:

· Asset management

· Maintaining financial records

· Filing tax returns

· Communication with all beneficiaries

· Filing appropriate paperwork with government agencies to maintain your loved one’s eligibility for government assistance

· Communication with your loved one and/or their caregivers to ensure they are receiving the care and services needed

· Settling the Trust when appropriate

Free Consultations

At Pedersen Law Office, LLC, we understand how important it is to provide for your loved ones, particularly those with special needs. We offer free consultations and meet with you personally to discuss your specific circumstances and come up with an estate plan that is best for you and your family. Our law office serves the communities of Appleton, Neenah, Menasha, Oshkosh, Green Bay and their surrounding areas.

Category: Wills & Trusts

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