WHAT IS A SPECIAL NEEDS TRUST?
A Special Needs Trust (“SNT”) is a type of trust. It is usually created by the parents of a special needs child (“Beneficiary”) who will never gain the daily living skills necessary for independent living.
Therefore, the Beneficiary will need tremendous emotional and financial support for his or her lifetime.
HOW CAN A SPECIAL NEEDS TRUST HELP?
A Beneficiary can qualify for government benefits such as Supplemental Security Income and Medicaid benefits. However, these benefits are needs-based – that is, the Beneficiary is limited in the amount of income and/or assets he or she may own.
This is not a problem when the Beneficiary is a minor. However, once the Beneficiary becomes a legal adult (usually at age 18), the Beneficiary may acquire vocational skills which can lead to income-producing employment.
If the Beneficiary earns too much or inherits high-value assets, the Beneficiary may lose his or her government benefits. This is a particular problem for a Beneficiary whose parents and relatives wish to provide for the Beneficiary in their will.
Normally, owning a house in which to live, a car, furniture, and normal personal effects does not affect the Beneficiary’s eligibility for government benefits.
However, assets in the form of cash, investment securities, undeveloped real estate, and the like would disqualify the Beneficiary from receiving government benefits.
A SNT is a way for parents and relatives of a Beneficiary to provide lifetime financial security for the Beneficiary, without losing government benefits.
By leaving real and personal property to the SNT, the Beneficiary never owns the assets, and thus, the assets are not used to calculate the Beneficiary’s eligibility for government benefits.
WHAT PROVISIONS DOES A SPECIAL NEEDS TRUST CONTAIN?
Like any other type of trust, the creator of the trust (the Beneficiary’s parents) chooses the trustee. The trustee can be one person, or many people.
The trustee can also be a corporation. You also specify the powers and duties of the trustee. The trustee’s powers and duties include discretion in spending the trust funds and making investment decisions.
However, the trustee will not disburse money directly to the Beneficiary as that could render the Beneficiary ineligible for government benefits.
Rather, the trustee will disburse money from the SNT to pay for “eligible” expenses on behalf of the Beneficiary, such as adaptive technology, educational or vocational training programs, medical or dental treatment not covered by government programs, and personal care attendants.
WHAT HAPPENS TO THE REMAINING MONEY IN THE TRUST WHEN THE BENEFICIARY DIES?
When the Beneficiary dies, the trust ends. If there is any money left in the SNT, the terms of the SNT dictate where the remaining assets go. And because the Beneficiary’s parents create the SNT in the first instance, the remaining SNT assets are left to the Beneficiary’s siblings.
Contact Rath Law Katy Today to protect your loved ones – 281 772 9585