1. What is a Special Needs Trust?
When your child is diagnosed with special needs like autism, speech and language disorders, and epilepsy, this can be a real challenge for families, since they often have complex symptoms and can exhibit varying degrees of functional impairment. In order to provide the best care possible for their child, many families use a special needs trust. This is a trust that allows a person with special needs to access all their assets at any time, and decide how they want to spend the money, or disburse it to someone else. A Special Needs Trust can be very important because it gives a person with special needs the ability to make decisions about their money at any given time, and gives them an income if they are unable to work.
2. So how does a Special Needs Trust Work?
Special Needs Trusts are a way to ensure that those who are disabled or afflicted with a chronic illness are able to live comfortably and independently for the rest of their lives. Sometimes the parents set up the trust or sometimes the individual himself sets up the trust when he or she comes into money from an inheritance or some settlement or via life insurance money.
The person who sets up the trust names a trustee whose responsibility to take care of the assets of the trust and its distribution. So it's important that the trustee knows the governing laws and also has a good relationship with the beneficiary. So whenever the beneficiary has some expense they request the trustee who checks if the expense is deemed necessary and eligible. Then the trustee uses the trust funds to pay for the expense.
3. Who would need Special Needs Trust?
A special needs trust may be needed in case a family has a member who has a disability or has special needs. These trusts help make their lives easier. A special needs trust can provide financial support for the disabled. It can be used to help pay for things such as medical costs, daily living expenses, education, and more. It ensures that they receive the care they need, while protecting the family's assets. It also ensures that the money or assets you leave behind will provide for your child or family member's special needs, and not your family's needs.
4. Does the existence of a Special Needs Trust qualify the beneficiary for public benefits?
The Special Needs Trust can significantly reduce or eliminate the need for Supplemental Security Income (SSI) and Medicaid for a disabled individual. A Special Needs Trust allows the beneficiary to have assets, such as a house and monthly income, without jeopardizing their eligibility for public benefits. The answer to this will vary from state to state. However, a Special Needs Trust (SNT) does not affect one’s eligibility for public benefits. Depending on the type of the beneficiary, benefits like Supplemental Security Income (SSI) or Medicaid may be available.
5. What are the benefits of a Special Needs Trust?
There are a lot of benefits of a Special Needs Trust. When you have a Special Needs Trust, your child always has access to the funds they need and assistance with daily living, healthcare, and financial management. It helps your child maintain the dignity of their independence as they age and shields them from eligibility for public benefits. It also protects an individual from a potential misuse of the funds, for example by the individual's spouse or children. However, care should be taken that the trust and trustee is sensitive to the needs of the trust beneficiary.
6. How Much Money Should You Put Into Your Special Needs Trust?
One of the most important decisions you'll make in regard to your special needs child is the amount of money that will be put into a trust fund. This is because it's what will make all the difference in how the money is spent throughout the child's life. There is no right answer to this question as it depends on your specific needs. The Trust is an important route to give your loved one the security and independence they deserve. There is no yardstick to figure it out. The amount needed is going to depend on the individual and their needs. So do consult an attorney and/or an accountant to be thorough in your planning.
7. Who can set up a Special Needs Trust?
A Special Needs Trust can be set up by any person who is legally permitted to do so. This could be a person with the power of attorney; a parent or legal guardian; or another person who is legally permitted to act for the special needs beneficiary. A Special Needs Trust is a legal and formal agreement overseen by a Trustee that sets the person, who is legally permitted to establish the Special Needs Trust, in charge of managing the beneficiary’s assets.
8. What are the different types of Special Needs Trusts?
There are three types of special needs trusts: pooled needs trusts, first-party special needs trusts, and third-party special needs trusts.
A pooled needs trust means that the person with disabilities will be the beneficiary of the trust, but other family members will be able to get financial benefits. This can also be called a supplemental needs trust.
A first party special needs trust is where the person with disabilities is the primary beneficiary of the trust, and they will receive benefits from its income and principal. The idea behind this kind of trust is that your child will benefit from the accumulation of the trust's assets over the years. You don't take money out of the trust. Instead, you simply add money to the trust over time.
A third-party special needs trust is typically established by a person in order to provide funds to care for someone else who is incapable of managing their own finances. Third-party special needs trusts are typically set up by a parent for the benefit of his or her child who will require lifetime care after the death of the parent.
Many people do not realize the importance of a Special Needs Trust. The benefits outweigh far more than the pitfalls. A Special Needs Trust could be the best way to provide for your child's needs. The world is difficult to navigate for individuals with autism due to the communication barriers and social difficulties they face, so this would be a great way to help meet your child's financial needs as their disabilities evolve, maintain some independence and help them live a happier life.
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If you have not yet done estate planning or haven’t got a Special Needs Trust in place and you need more information, an excellent book to check out is “What will happen to my Special Needs Child When I am Gone? “by Susan Jules. It is available as an eBook on our website and as a paperback on Amazon
Looking for info setting up a new will since death is family and I have medical questions