Special Needs Trusts

beautiful blond kid blow dandelion outdoorWhat is a “special needs” trust?  Suppose that Tom and Helen have an adult son Daniel who has a disability.  On account of his disability, Daniel may be entitled to receive some types of public assistance.  Daniel’s eligibility for public assistance for persons with disabilities may depend on his assets or his income.   If he has too much money at his disposal, he may not qualify for public benefits.  If Tom and Helen simply give Daniel money or property, it will become Daniel’s property, and it will be counted against him when he applies for public assistance.

How do you create a special needs trust?

How can Tom and Helen help Daniel without risking his right to public assistance?  They could create a third-party “special needs” trust for him.  They create the trust, transfer property into it, and appoint a trustee to administer the trust for Daniel.  The property in the special needs trust is not considered Daniel’s property, mainly because Daniel has no control over that property.  Only the trustee can decide when and how to use the trust property on Daniel’s behalf.  In fact, the trust must provide that Daniel will have no say in how the trust property will be used.

Is a special needs trust irrevocable?

Once Tom and Helen create the special needs trust, they cannot undo it and receive the trust property back.  On the other hand, if they pick a trusted family member or friend as the trustee, they can be assured that the trustee will look out for Daniel’s welfare.  The trustee will not use the money in the trust to pay for things that can be paid for by public assistance programs.   Tom and Helen have ensured that Daniel will have as much money as possible to help him with his disability.  They also have the peace of mind in knowing that, is something happens and they are no longer around, Daniel will continue to be well provided for.

Helping clients to create financial security for their loved ones with disabilities is one of the most rewarding parts of my estate planning practice.  If you have a loved one who you think might benefit from a special needs trust, talk to an estate