Special Needs Trusts and Planning

Special Needs Planning

Do you have a family member or friend with a disability?
Do they receive government assistance for medical expenses?
Do you want to give them security and peace of mind without disqualifying them from government benefits?

A Special Needs Trust may be the answer!

Disabled individuals represent a significant portion of the population. For many of these individuals, paying for the medical care they need is a struggle.

Currently, there are many government programs that provide assistance to those with disabilities including Supplemental Security Income (“SSI”) and Medicaid. Though these programs provide valuable support for the disabled, they come with stringent eligibility guidelines that must be met to receive benefits. For example, with SSI, the disabled person must have both a low income and have a low amount of countable asset. Qualifying for SSI allows an individual to not only receive cash payment, but often more importantly entitles the recipient to Medicaid.

Special needs planning will ensure that your loved one qualifies for Medicaid without restricting his or her quality of life.

THE PROBLEM WITH A LUMP SUM PAYOUT

An individual with a disability can find themselves in a difficult financial position if they receive a lump sum payment because receiving a lump sum can suspend government benefits for up to thirty six months. Such lump sum payments are usually generated from two sources:

Settlements from personal injury or medical malpractice claims, and
Inheritances from family or friends

PRESERVATION OF FUNDS THROUGH SPECIAL NEEDS PLANNING

An individual with a disability can benefit from a large lump sum payout without incurring a significant decrease in government assistance by using a Special Needs Trust.

While special needs planning often focuses on the creation of a Special Needs Trust, appropriate planning requires an experienced attorney who fully understands how to maximize the benefits available to the disabled individual. After government benefits are identified, a plan for safeguarding any lump sum payment can be created. This plan ensures that the disabled individual can benefit from the lump sum payment to the greatest extent possible without losing government benefits.

TYPES OF EXPENSES THAT A WELL ESTABLISHED SPECIAL NEEDS TRUST CAN COVER

A Special Needs Trust is designed to supplement the government benefits that a disabled individual receives. The trust can pay for expenses such as:

Purchase of a home or vehicle
Medical expenses not otherwise covered
Adaptation of the home or vehicle
Adaptive equipment
Vacations
Other expenses

HOW ARE SPECIAL NEEDS TRUSTS ESTABLISHED?

Gifts: A special needs trust is often created when a family member wishes to leave a disabled individual part of their estate. The trust is created as part of a comprehensive estate plan that may also include a will, financial power of attorney, and advanced directive for health care. Although it is possible for a special needs trust to be included in a will, it is usually advisable to create a stand alone trust, as it allows other friends and family members to give money to the disabled individual.

Legal Settlement: An injury can change one’s life in a heartbeat. When the injury results in a personal injury or medical malpractice lawsuit, a special needs trust should be established to protect the settlement received. Even with a large settlement amount, it can be difficult to cover the costs needed for quality medical care for an entire lifetime.