Special Needs
Special Needs Planning
Suppose you currently provide care for a child or loved one with special needs (such as mental or physical disabilities). In that case, you must have contemplated with concern what may happen to them when you are no longer able to provide care for them.
While you can certainly ensure that they receive money and assets, such a bequest may prevent them from qualifying for essential benefits under the Supplemental Security Income (SSI) and Medi-Cal programs. However, public monetary benefits only provide necessities such as food, housing, and clothing.
As you can imagine, these limited benefits will not provide those loved ones with the resources that would allow them to enjoy a richer quality of life. But if parents leave any assets to their child who is receiving public benefits, they run the risk of disqualifying the child from receiving them. Fortunately, the government has established rules allowing assets to be held in trust, called a “Special Needs” or “Supplemental Needs” Trust for a recipient of SSI and Medicaid, as long as certain requirements are met.
Our law firm can help you set up a Special Needs Trust so that government benefit eligibility is preserved while at the same time providing assets that will meet the supplemental needs of the person with a disability (those that go beyond food, shelter, and clothing and the medical and long-term supports and services of Medicaid). The Special Needs Trust can fund those additional needs.
The Special Needs Trust must be designed specifically to supplement, not replace, public benefits. Parents should be aware that funds from the trust cannot be distributed directly to the disabled beneficiary. Instead, it must be disbursed to third parties who provide goods and services for use and enjoyment by the disabled beneficiary.
The Special Needs Trust can be used for a variety of life-enhancing expenditures without compromising your loved one’s eligibility, such as:
- Annual check-ups at an independent medical facility
- Attendance of religious services
- Supplemental education and tutoring
- Out-of-pocket medical and dental expenses
- Transportation (including purchase of a vehicle)
- Maintenance of vehicles
- Purchase materials for a hobby or recreation activity
- Funds for trips or vacations
- Funds for entertainment such as movies, shows, or ballgames
- Purchase goods and services that add pleasure and quality to life: computers, videos, furniture, or electronics.
- Athletic training or competitions
- Special dietary needs
- Personal care attendant or escort
Special Needs Trusts are a critical component of your estate planning if you have disabled beneficiaries you wish to provide after your passing. Generally, special needs trusts are either standalone trusts funded with a separate asset, like a life insurance policy, or they can be a sub-trust in your existing living trust.
