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Articles
by  Alice Reiter Feld
~ Planning for the Heir with Special Needs
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The Special Needs Trust
If you have a loved one with special needs (an emotional or
physical challenge), you are concerned about the balance between what
they might inherit and the possible loss of their government benefits.
This is frequently overlooked in the estate planning process.
Families need to be aware of their options in providing for a
special-needs loved one.
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The special-needs person (SNP) may be disinherited.
This is an option if the assets available for the SNP are small.
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Give the SNP the assets outright. Caution should be
exhibited with this option as it could result in government
interference or the SNP spending it unwisely.
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Another option is to give the funds to a third party for the care
and well-being of the SNP. Be careful!
The third party you chose has no legal obligation to spend it on the
SNP. It is subject to the owner's creditors and can have a negative
effect on their his or her income or estate plan. Also, when the owner dies,
his or her heirs may not be trusted to care for the SNP
heir.
This leaves us with the last and usually
best option, the Special Needs Trust (SNT). Special
Needs Trusts are used to allow one person to set aside funds for
the care and benefit of an SNP. This is a common family
practice for special-needs children, grandchildren, siblings, or other
relatives. The key to an SNT is that they are drafted to be
totally discretionary so that the SNP cannot demand
distributions. Since the assets are not legally available to the
beneficiary on demand, they are not considered assets when the SNP
applies for government benefits.
Special Needs Trusts are
also used to manage and shelter funds of the SNP gained
through inheritance, life insurance, or personal injury award. As long as
the SNP is not the trustee, there is no interference with
the SNP's ability to qualify for SSI or other government
benefits.
SNT's must conform to government requirements
to assure that the SNP continues to be eligible for SSI or
Medicaid.
Please call our office so that you may learn how a Special
Needs Trust may protect your Special Needs Person as
well as other methods of preserving assets for Medicaid and other
government benefits.
For more information on Special Needs Trusts, see "For
Personal Injury Attorneys."
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Law Offices of Alice Reiter Feld,
P.A.