Parents with special needs children need to be careful when drafting their estate plans, to ensure that the plan provides adequate support for their child without causing any negative consequences. As a recent article explains, the most common way to do this is through a Special Needs Trust (“SNT”).
Special needs beneficiaries often receive benefits such as Supplemental Security Income and Medicaid. These programs are need-based, so a large inheritance received outright may cause benefits to cease. The key aspect of a SNT is that it allows a person to transfer money to his or her special needs beneficiary without affecting the beneficiaries Supplemental Security Income and Medicaid benefits. This is because, legally, the trust owns the assets rather than the beneficiary.
Most commonly, parents set up testamentary special needs trusts. These trusts are drafted and put in place, however not funded until the death of the trust creator. This means that the money remains yours until your death. A self-settled trust, on the other hand, requires funding immediately.
In order to set up a SNT, speak with an attorney who can tailor the trust to your individual circumstances. The best trust will address your needs but also remain flexible. Importantly, be sure to select a trustee that is willing and able to handle the responsibilities that come along with being a trustee. If you do not have a family member that would be appropriate, consider hiring a professional.
