Special Needs Trusts for Disabled Individuals

Working with disabled clients and their family members is one of the most rewarding aspects of an estate planning attorney's job. One of the most important reasons for working with a young, disabled client is ensuring that funds are preserved for their long-term improvement and quality of life.

Such work is rewarding because it provides great comfort for the disabled individual and their families who can be confident that their loved one will be taken care of for the rest of their life.

What is a special needs trust?

A special needs trust is an estate planning tool that holds funds for the benefit of a disabled individual. The trust allows those funds to be used to provide an enhanced quality of life, without jeopardizing much needed public benefits, such as Medicaid and Supplemental Security Income (SSI).

The trustee can use the funds for a variety of purposes, including but not limited to:

• Computer
• Education
• Entertainment
• A vacation for the beneficiary and caregiver
• Home healthcare in addition to those covered by Medicaid

There are two basic types of special needs trusts. The first type holds assets that belong to the disabled individual, which must reimburse the state for Medicaid expenditures upon the person's death.

The second type of trust holds assets that are placed into the trust by someone other than the disabled individual; for example, a parent or a grandparent. With this type of special needs trust, the trust assets do not need to reimburse the state for the Medicaid costs when the disabled individual passes away.

The latter type of trusts are much more flexible. Such a trust may be revocable by the settlor, and it can be established after the disabled individual turns 65.

With this special needs trust, a parent can ensure that any funds left over after the disabled child passes away are distributed to other family members, while ensuring that the child with special needs is taken care of after the parents are gone.

To learn more about special needs trusts, contact an estate planning lawyer in our directory!