Special Needs Trust

A major problem has impacted senior citizens as they age in place. Many of these folks have either children or family members who are suffering from a disability. If the person dealing with the disability has the good fortune of receiving assets from the deceased loved one, there is the possibility that their good fortune could actually negatively impact their ability to receive needed governmental benefits. Until the recent implementation of Federal law which is known as an Able Trust which allows a disabled individual to receive up to $100,000 without disqualifying them from receiving governmental benefits, an inheritance from a love one could actually have a harmful effect.

When planning your estate for a loved one who suffers from a disability while receiving both state and local governmental benefits, it is wise to consider what is known as a special needs trust. This trust can be utilized in order to supplement various governmental benefit programs. The disabled family member can retain access to Medicare, Social Security and Medicaid benefits. This type of trust is known as a discretionary trust. It permits the named trustee to have total discretion over the funds left in the trust for the disabled party and to unilaterally determine when and how to supplement governmental programs that are available to the disabled family member. The special needs trust assets and income can be utilized to provide the family member with goods and services that can improve the beneficiary's quality of life without negatively impacting needed governmental benefits. The trust can be established either during your lifetime or after you pass away. In both cases, the trust must be irrevocable when funded. Subsequent to the disabled family member's death, the entire proceeds can be passed to the heirs designated by the person who is established as the trustee. Neither this state nor the federal government will have any claim to the assets contained within the framework of the special needs trust either during the disabled party's lifetime or at the time of their death.

The most important element that you should consider when establishing the special needs trust is the selection of the appropriate trustee or trustees. In many cases, it makes sense to use a corporate trustee to oversee and manage the assets of the trust. A corporate trustee has perpetual existence which protects the family in the event that healthy family members meet with an untimely disability or death. It also makes sense to consider selecting a person who has a close relationship with the disabled party to serve as a co-trustee. In this way, you can make certain that a family member or friend who knows the disabled family member will be available to the corporate trustee in order to give personal advice with regard to discretionary distributions which must be considered. Keep in mind that the employees at financial institutions who serve as corporate trustees may change on a fairly frequent basis. In all cases, it is wise to name multiple successor trustees to serve as a fiduciary which in turn will cover the lifetime of your disabled loved one who may live 50 years or more. It is also recommended, that you give your family a right to remove and replace the corporate trustee should they find that they are unable to get along with one another.

After you have completed your estate plan for your disabled family member, it is wise for you to take the time to develop and document a day care plan for this person. You should delineate their favorite activities, the medications that they take, and each activity in which they participate on a day to day basis. Note their favorite foods or any specific dietary limitations or recommendations that the caregiver should consider. What are their favorite activities and their daily routine over the course of a week or even a month? It is wise to tell the caregiver what activities the disabled family member can handle on their own. This document should be completed in your own hand written memo and attached to or kept with your estate planning documents. Always make certain that your team of advisors have an updated copy.


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