Special Need Trust
A special need trust is almost identical to the trust you know. However, there exist a huge difference. A special need trust is a legal arrangement and fiduciary association that allows a physically or mentally incapacitated individual or an individual with chronic illness to obtain income without diminishing their eligibility for the public assistance disability benefits provided by Social Security, Supplemental Security income, Medicare or Medicaid.
In a fiduciary relationship or association, an individual acts in the best interest of an individual or individuals to manage assets.
How Does it Work?
A special needs trusts caters for the percentage of an individual’s financial needs that are not covered by public assistance payments like Social Security and the likes. The assets present in the trust are not used to qualify the individual for public assistance, provided they are not utilized for some food or housing expenses.
Takings from a special needs trust are typically used to settle medical bills, pay caretakers, settle transportation costs, including other allowed expenses. The individual or party who sets up the trust will select a trustee who will manage the trust. This trustee will also supervise the management and distribution of funds.
Assets that the disabled individual owns that is contained in the trust may be subjected to Medicaid’s repayment rules. However, assets provided by third parties like parents are not subject to the Medicaid repayment rules. Special needs trust can also be regarded as “Supplemental needs trust.”
How Does a Special Needs Trust Works?
Setting up a special needs trust comes with several benefits for the beneficiaries and the owner or creator of the trust. The beneficiaries has a way to get financial help without risking their eligibility for income-restricted programs or putting their services in jeopardy. On the other hand, the individual or party who established the trust has some guarantee that the proceeds will go to expenses they outlined.
When a third party deposits funds in a special needs trust, the party is guaranteed that the funds will be used for the stated purpose. For instance, parents might decide to deposit assets in a special needs trust to cater to their incapacitated son instead of offering the money to their daughter. Special needs trust cannot be revoked. This means that, the terms of the trust cannot be changed, altered, cancelled, or modified without the consent of the beneficiaries. In addition, assets in a special needs trust cannot be taken by creditors or by the winners of a lawsuit.
It is very essential that the individual who establish the trust or their legal representative draft the words or the term of the trust documents meticulously to make sure that it is valid, and to also conform that the details and purpose of the document are crystal clear. The special needs trust must be crated before the beneficiary clocks 65.
How can A Special Needs Trust Be of Help?
One way to prevent yourself from losing eligibility for SSI or Medicaid is to set up this trust. After it must have been set up, instead of transferring your assets directly to your loved ones, you can simply retain it in the special needs trust.
In addition, you can also designate an individual to act as trustee. This individual will know all about the trust assets and will be charged with spending money on your loved ones behalf. Since your loves ones will have zero control over the money, SSI and Medicaid admins will turn a blind eyes on the trust property for program eligibility purposes. The trust will end when it is no longer required, most times, this happens at the beneficiary’s death or when the money in the trust has been exhausted.
Will you Require the Assistance of An Attorney?
Some attorneys will inform you that only a lawyer can help you set up a special need trust. However, the truth is that you can create one yourself under the right supervision.
Of course, there are times when you need to seek the assistance of an attorney. For instance, you must see an attorney if you want to set up a trust that will be funded with the funds of the beneficiary (for example, a settlement from a personal injury lawsuit) rather than your funds. Complex and state-specific rules apply to these types of trusts. Contact a special needs trust attorney Buffalo, NY to set up a special needs trust now!
