WHAT ARE THE ADVANTAGES OF A SPECIAL NEEDS TRUST?
Feb. 23, 2018
If you are the parent of a special needs child in Missouri, you have all the responsibilities of other parents, but to a higher degree. You also have the concern of caring for your child throughout his or her adult life. Establishing a special needs trust can help ensure that your child is provided for in later years.
FindLaw explains that one of the biggest benefits of using this trust is the protection it affords beneficiaries who do not have the mental ability to manage financial matters. Many times, those with disabilities are able to take advantage of government assistance programs, which can include Medicaid for medical needs, vocational rehabilitation for work programs and subsidized housing and income programs. If you, as a parent, leave a cash settlement through a will, it could end up costing your special needs child these types of government benefits, should the amount put the child into a higher income bracket.
To ensure the child continues to qualify for those benefits, you can establish a special needs trust, naming a reliable family member or friend as trustee. Because those funds are wholly controlled by another person, officials have overlooked these assets in determining eligibility for government programs. For the same reasons, trusts can also be structured for inheritances or settlement funds that may come to the child. Should the beneficiary be sued for any reason, trust assets are still protected because that are not available to any judgment.
In establishing a special needs trust, there are several specific elements to include in the language. Some things to cover include:
That the trust is not meant to be used for basic support, and is instead for “supplemental and extra care,” in addition to what is available through government programs.
How the trust is exempt from the Omnibus Budget and Reconciliation Act.
Explain how payback to Medicaid is provided for, using the required wording.
Omit use of a “Crummey Clause,” which is meant for estate taxes.
Note specifics in the Social Security Operations Manual that allow the establishment of a special needs trust.
Along with these inclusions, be sure to submit relevant parts of the U.S. Tax Code. If you need help or advice setting up a special needs trust, contact an attorney with expertise in estate planning.
This information about special needs trusts is for informational purposes only. It is not meant to be taken as legal advice.