Parents who have a son or daughter with a disability must carefully plan their estates to provide for the disabled person?s best interest.
Question: What is a special needs trust?
Answer: A special needs trust is a trust set up for the benefit of an individual with a disability. The purpose of this type of trust is to ensure that the assets placed in the trust are not counted as the disabled individual's assets. This allows the disabled person to remain eligible, or possibly qualify in the future, for government benefits, such as Supplemental Security Income, Medicaid or other need-based benefits, while maximizing resources to provide for supplemental needs not provided for by government benefits such as travel or entertainment.
Question: Is there any risk leaving money to other family members to provide for my disabled child?
Answer: If assets are left to another person, those assets legally belong to them. The assets can be exposed to loss due to lawsuits, creditors, divorce and the death of the holder of the funds. Using a special needs trust guarantees that the funds will be held only for the benefit of the person under the disability or chronic illness, and not for any other purpose.
Question: What is a self-settled special needs trust?
Answer: A self-settled special needs trust is funded by the assets of the disabled beneficiary. A self-settled trust must be established for the beneficiary by a parent, grandparent, legal guardian or the court. This type of trust states that any amount remaining in the trust will be paid to Medicaid upon the death of the trust beneficiary.
Question: What is a third party special needs trust?
Answer: A third party special needs trust is funded from the assets of a third party. The most common use of a third party special needs trust is in connection with an individual's will. The trust permits assets to be available for the supplemental needs of your son or daughter while allowing him or her to remain eligible for government benefits. Some government benefits such as Supplemental Security Income and Medicaid have financial eligibility requirements. If the assets are placed directly into your son's or daughter's name their financial assets could make them ineligible for benefits.
Question: What kind of assets can be used to fund a special needs trust?
Answer: Essentially any kind of asset can be used to fund a Special Needs Trust, including insurance proceeds, inheritances, lump-sum payments, personal injury settlements or just saved money. Money received as "back pay" for SSI claims are income to the beneficiary when received. This lump sum of income can disqualify a person from the benefits. For SSI, a recipient cannot have more than $2,000 in assets. In order to maintain benefits qualification, a special needs trust can be established for any assets belonging to the disabled beneficiary.
Question: By becoming trustee of my child's special needs trust, does that also make me my child's legal guardian?
Answer: Parents often assume that because they are the caregiver of their son or daughter that they are also their legal guardians. That is incorrect. At the age of 18, an individual is considered an adult and therefore under the law are able to make their own legal and financial decisions. As a parent, in order to become your son's or daughter's legal guardian, it is necessary to petition the court to become responsible for handling the disabled child's finances and provide for their needs. The court must make the determination that the disabled child is unable to act responsibly on his or her own behalf.
Question: Why is it so important for us to plan for the future?
Answer : Parents who have a son or daughter with a disability must carefully plan their estates to provide for the disabled person's best interest. Families that wish to establish special needs trusts should consult with a special needs attorney. With proper legal and financial planning, families can feel reassured that they have taken the necessary steps to protect their disabled child?s best interests.
If you would like to submit a question for publication, email it to rrokisky@rokiskylaw.com. Jeffrey J. Rokisky is an elder law attorney with offices in Wheeling, Weirton, Elkins, Clarksburg and Robinson Township.
