A special needs trust is a legal arrangement that allows you to provide for your child with a disability while maintaining your child’s eligibility for government benefits. The trust can hold cash, stocks, and other financial assets that you transfer to the trust’s care, and the trust will use those assets strictly for your child’s benefit.
The trust is a legal entity that has a trustee and possibly co-trustees who are responsible for managing the trust. The trustees pay bills on behalf of the beneficiary and make decisions about any investments or other financial matters related to the trust. You might name yourself as trustee, or you might choose another person or group (such as a bank) to act as the trustee of the trust.
If you already have an estate plan in place, you can easily add a special needs trust by specifying in your will or living trust that you want some of your assets transferred into a special needs trust upon your death. In fact, many parents who set up special needs trusts include instructions in their wills for money to be transferred from their estate into the special needs trust upon their death.
A special needs trust is a legal document that allows you to provide for your child’s needs without jeopardizing government benefits, such as SSI and Medicaid. The money in the trust will be used by the trustee, who you appoint, to pay for the extra things your child needs. The trustee must use the money only for those things that are not covered by government benefits. In order to qualify for these benefits, your child must have less than $2000.00 in resources. Therefore, if you leave assets directly to your child or include him or her in your will or living trust, your child will lose these valuable benefits. This is where a special needs trust comes in.
The easiest way to create a special needs trust is through a lawyer that specializes in special needs trusts. Your estate planning attorney should be able to help with this process and should have access to the correct forms.
A Special Needs Trust can be established while you’re alive, or it can be included in your Will. A Will only goes into effect after you die, however, and if your child needs help immediately, this may not be the best option for them.
If you decide to establish a trust while you’re alive, you can choose whether it’s revocable or irrevocable. An irrevocable trust cannot be changed once it’s created, so make sure that you fully understand the terms before establishing an irrevocable trust. A revocable trust is much more flexible because it can be changed at any time by its creator.
You’ll need to determine who will manage your child’s trust funds. In addition to yourself (if possible), you’ll likely want to name at least one other person, who can serve as successor trustee if something happens to you. It’s a good idea to name more than one successor trustee so that there’s no interruption in service should one of them become unavailable.
A Special Needs Trust can be set up by you or an agent acting on your behalf. It can also be created if you leave behind funds in a will after you die. If a loved one leaves money to you in their will, they can make sure that the funds are placed into an SNT.
The trustee of the special needs trust has power over the funds in the trust and decides how and when they will be used, based on the terms of the trust document. The trustee cannot give money directly to your relative but can use it on his or her behalf.
A Special Needs Trust is designed to supplement, not replace, these public benefits by providing additional income and resources for your loved one’s care. The money in the trust cannot be used to pay for food, shelter or clothing, because those are expenses that are covered by the government. However, the money can be used for medical costs, education and recreational expenses that aren’t covered by public assistance programs.
A Special Needs Trust may also be used to benefit other family members who aren’t disabled. The main difference is that in this case, the assets are distributed to the beneficiary after they die.