If you are a care giver for a child or loved one with special needs (such as mental or physical disabilities), you probably have worried about what may happen when you can no longer provide and care for them.
While you can certainly provide that they receive money and assets, such a bequest may prevent them from qualifying for essential benefits under the Supplemental Security Income(SSI) and Medicaid programs. Often, Medicaid is the only health insurance that a person with special needs can qualify for. Government benefits only provide for the bare necessities such as food, housing and clothing. As you can imagine, these limited benefits will not provide those loved ones with the resources that would allow them to enjoy a richer quality of life. But if parents leave any assets to their child who is receiving public benefits, they run the risk of disqualifying the child from receiving these benefits. Fortunately, the government has established rules allowing assets to be held in a trust, called a “Special Needs” or “Supplemental Needs” Trust for a recipient of SSI and Medicaid, as long as certain requirements are met.
Smith Barid can help you set up a Special Needs Trust so that government benefit eligibility is preserved while at the same time providing assets that will meet the supplemental needs of the disabled person (those that go beyond food, shelter, and clothing and the medical and long term supports and services of Medicaid). The Special Needs Trust can fund those additional needs. In fact, the Special Needs Trust must be designed specifically to supplement, not replace, public benefits. Parents should be aware that funds from the trust cannot be distributed directly to the disabled beneficiary. Instead, the funds must be disbursed to third parties who provide goods and services for use and enjoyment by the disabled beneficiary.
The Special Needs Trust can be used for a variety of life-enhancing expenditures without compromising your loved one’s eligibility such as:
- Annual check-ups at an independent medical facility
- Attendance at religious services
- Supplemental education and tutoring
- Out-of-pocket medical and dental expenses
- Transportation (including purchase of a vehicle)
- Maintenance of vehicles
- Purchase materials for a hobby or recreation activity
- Funds for trips or vacations
- Funds for entertainment such as movies, shows or ballgames
- Purchase of goods and services that add pleasure and quality to life: computers, videos, furniture, or electronics
- Athletic training or competitions
- Special dietary needs
- Personal care attendant or escort
Special Needs Trusts are a critical component of your estate planning if you have disabled beneficiaries for whom you wish to provide after your passing. Generally, Special Needs Trusts are either a stand alone trust funded with a separate asset like a life insurance policy or a sub-trust of your living trust. If you’d like to schedule a time to talk with one of our attorneys about your special child’s needs, click here to request an appointment. To learn more how about how our process for special needs planning, click here.