Special Needs Trusts
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If a member of your family or a loved one has special needs, one option to assist in caring for them and their future is to set up a special needs trusts to provide them financial support. This circumvents the person from losing any government benefits that the money would otherwise disqualify them form having.
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Setting up the Trust
First, you must create the trust document. Hiring a lawyer to prepare the trust will ensure that the trust is tailored to you and your loved one’s needs and functions as you want it to. The person setting up the trust, the grantor, places property into the trust to be managed by another person the trustee. Normally the grantor and trustee of the special needs trusts are, at first, the same person. The grantor serves as trustee until he or she dies, becomes incapacitated, or resigns. Then a previously named successor trustee takes control of the trust. Any named trustee is legally obligated to follow the terms of the trust document to use the property for the benefit of the person with special needs, often referred to in the trust as the beneficiary.
Finalizing the Trust and initial funding of the trust
The trust is finalized once the grantor has signed the trust documents and their signature has been notarized. The trust will to apply and be given an identification number from the IRS. Once that has occurred, the grantor will need to open a bank account with a minimal deposit. At that point, the trust is ready to be funded through any wills, living trusts, beneficiary designations, or other estate tools of those who want to support the beneficiary. Normally the trust contains a small amount of money until the grantor passes away. At which point property from wills or a revocable living trust is deposited into the trust to provide for the beneficiary.
Any type of property can he held in a special needs trust, including real estate, stocks, collections, businesses, patents, etc. Since the primary purpose of a special needs trust is to use cash money to acquire items that are not covered by SSI or Medicaid, special needs trusts often sell property items for cash money.
How special needs trusts can be utilized
Trust assets can be used for the needs of the beneficiary, provided the items purchased are not illegal or contrary to the terms in the trust. Since the primary purpose of a special needs trusts is to enhance the quality of life of the beneficiary. Trusts can be used to pay for:
It is important to note that payments for food or shelter are more complicated because they can trigger a reduction in SSI benefits, but there are exceptions. Large gifts of cash from the trust can also trigger a reduction in benefits.
Terminating the special needs trust
The trust ends when it is no longer needed. The four main reason to end a special needs trusts are:
I have questions about special needs trusts
Parks and Meade has an experienced estate and trust attorney that can answer your questions. Schedule your consultation below or call 614-389-1038.
First, you must create the trust document. Hiring a lawyer to prepare the trust will ensure that the trust is tailored to you and your loved one’s needs and functions as you want it to. The person setting up the trust, the grantor, places property into the trust to be managed by another person the trustee. Normally the grantor and trustee of the special needs trusts are, at first, the same person. The grantor serves as trustee until he or she dies, becomes incapacitated, or resigns. Then a previously named successor trustee takes control of the trust. Any named trustee is legally obligated to follow the terms of the trust document to use the property for the benefit of the person with special needs, often referred to in the trust as the beneficiary.
Finalizing the Trust and initial funding of the trust
The trust is finalized once the grantor has signed the trust documents and their signature has been notarized. The trust will to apply and be given an identification number from the IRS. Once that has occurred, the grantor will need to open a bank account with a minimal deposit. At that point, the trust is ready to be funded through any wills, living trusts, beneficiary designations, or other estate tools of those who want to support the beneficiary. Normally the trust contains a small amount of money until the grantor passes away. At which point property from wills or a revocable living trust is deposited into the trust to provide for the beneficiary.
Any type of property can he held in a special needs trust, including real estate, stocks, collections, businesses, patents, etc. Since the primary purpose of a special needs trust is to use cash money to acquire items that are not covered by SSI or Medicaid, special needs trusts often sell property items for cash money.
How special needs trusts can be utilized
Trust assets can be used for the needs of the beneficiary, provided the items purchased are not illegal or contrary to the terms in the trust. Since the primary purpose of a special needs trusts is to enhance the quality of life of the beneficiary. Trusts can be used to pay for:
- Caregiving, such as a personal attendant
- Therapies not paid for by Medicaid
- Experiences, such as travel or concerts
- Services, such as internet, cell phone, or a cleaning service
- Pet care
- Miscellaneous items, such a clothing, furniture, or computers
It is important to note that payments for food or shelter are more complicated because they can trigger a reduction in SSI benefits, but there are exceptions. Large gifts of cash from the trust can also trigger a reduction in benefits.
Terminating the special needs trust
The trust ends when it is no longer needed. The four main reason to end a special needs trusts are:
- The beneficiary no longer needs government benefits
- The beneficiary become ineligible for government benefits
- The trust funds are used up
- The beneficiary passes away.
I have questions about special needs trusts
Parks and Meade has an experienced estate and trust attorney that can answer your questions. Schedule your consultation below or call 614-389-1038.
