Having a loved one with special needs brings unique joys and experiences to your life. Understandably, you’d want to ensure your loved one is well-provided for when you’re no longer alive. Many people think it’s challenging to leave money to people with disabilities without disqualifying them from government benefits. However, a special needs trust (SNT) can ensure your loved one is taken care of financially while protecting their government benefits.
Establishing a special needs trust for your loved one may be the best way to supplement whatever funds the government provides them, but estate planning can be a long and arduous process. With guidance from the lawyers at Stepp & Sullivan, you can rest assured knowing that the process may be smoother and your loved one will be taken care of later because of the time you spent planning for their future now.
How You Can Protect Your Loved One’s Government Benefits With a Special Needs Trust
It is accurate to say that you cannot leave money directly to a disabled son, daughter, or grandchild if they are receiving certain government assistance. Thankfully, SNTs offer a solution for this issue. Learn how a special needs trust and careful planning can protect your loved one’s eligibility for government benefits like Medicaid and Supplemental Security Income (SSI).
A Special Needs Trust Is Not a Countable Asset
An individual with a disability or a chronic illness can have an unrestricted amount of assets held for their benefit through a special needs trust. Because the trust owns the assets as opposed to the individual, the money kept in the trust is not regarded as a countable asset when evaluating whether the person is eligible for the benefits. As a result, the funds are still available to your loved one with counting as income.
A Trustee Will disburse your Loved One’s Funds
Money in special needs trust is not a countable asset because it leaves your loved one’s funds in the hands of a trustee, making it not an income or easy to convert to cash. Whoever you name as a trustee will be responsible for distributing the funds in the trust according to your loved one’s needs.
When naming a trustee, you can choose someone you believe gets along well with your loved one and has their best interests at heart, or you can use a pooled trust if you do not have a suitable candidate to act as trustee. A pooled trust is managed by a non-profit organization that collects and invests money from multiple families but still maintains a separate account for family contributions made solely for each disabled individual, even though all of the monies are invested and managed together.
A Special Needs Trust Supplements Government Benefits
Special needs trusts are designed to supplement the resources and services provided by government programs, not to cover the same ground. They are used for supplemental purchases and costs that make your loved one feel more comfortable and improve their quality of life.
Because of this, SNT disbursements can cover the cost of various goods and services not covered by medicaid and step in where government assistance falls short. To ensure disbursements won’t be considered countable income, trustees typically pay merchants and service providers directly.
Learn More About the Benefits of a Special Needs Trust
Through a special needs trust, even though your loved one doesn’t have direct access to the money, they have someone trusted they could contact to fund their needs and wants. This makes their money conveniently accessible despite not being available to them directly. Ultimately, Special needs trusts provide many advantages, but you should still speak with a lawyer to fully grasp their capabilities.
Stepp & Sullivan is a full-service family law firm experienced in special needs planning. We have been practicing the law for more than 40 years and are prepared to use that experience to your and your loved ones’ advantage. For example, establishing a trust customized to your loved one’s special needs is one of many ways we can serve you as a client. To learn more, call our office at (713) 677-2635 or submit our contact form.