Special Needs Trusts
Providing for a disabled child or relative can be difficult. Your goal is to make best use of private resources and keep public benefit eligibility for programs such as Social Security and Medicaid.
A possible solution is a special needs trust or supplemental needs trust. These trusts serve two key goals: A disabled person keeps his or her eligibility for public programs, while trust funds cover many of the extras to enrich and make life comfortable.
Learn about the language and workings of a special needs trust, and you’ll be prepared to create a trust for your loved one and put it to use.
How a Special Needs Trust Works
A special needs trust uses basic trust structure: A donor gives legal ownership of property to a trustee, who follows trust document directions and uses the property for a beneficiary. For example, you create a trust, transferring property to your trusted friend or bank, for the benefit of your adult disabled child.
These are the basic parts of a special needs trust:
- A trust instrument. A legal document that creates the trust
- A trustee. Someone you choose to manage the trust
- Trust property. The trust is funded with money, real estate or other property
- A beneficiary. The disabled person
- Residual beneficiaries. Persons who receive the trust assets when it ends
Creating and using a trust can appear to be complex and a lot of work. It might seem like a good idea to leave money to a close relative for your loved one’s needs. However, when a relative holds assets in his or her own name, and not as a trustee, it belongs to him or her. The assets may be lost to:
Legal judgments against your relative
Your relative’s bankruptcy
Your relative’s choice to spend the assets on something else
Taxes owed by your relative
Your relative’s estate plan – a will could leave all assets to someone else, or absent a will, state law controls who receives the assets
A special needs trust prevents these problems. It also avoids possible issues with family politics.
Using Trust Funds
A trustee’s payments from the trust assets are called distributions. Special needs trust terms are drafted to only allow payments for the extras public benefits don’t cover.
A special needs trust is an important tool in managing and making best use of private and public resources to give a disabled person the best life possible.
To speak to one of our legal professionals who is dedicated to communicating with you, is sensitive to your needs and is an effective and skilled advocate, contact the law firm of Karnes Legal Services, at 731-668-9529. Or, if you prefer, send us an e-mail using our secure online form. We accept all major credit cards.