Special Needs Trusts Basics

A special needs trust (also known as a supplemental needs trust) is a specialized document that benefits an individual who has a disability. Most often a special needs is a single document, but sometimes a special needs trust can be incorporated as a part of a Will. Special needs trusts can be either revocable or irrevocable depending on how they are crafted and by whom the funds are contributed.

Special needs trusts allow an individual (most commonly a parent or grandparent) to leave assets for the benefit of a child or person with a disability without the assets being counted for purposes of qualifying for government assistance. This means that you can leave unlimited assets for the benefit of a person with a disability, and they can still qualify for Social Security Income, Medicaid, subsidized housing, and other benefits.

When should a special needs trust be created?

By law, a special needs trust can be crafted any time before the beneficiary turns 65. Similar to most estate planning documents it is usually important that a special needs trust is drafted early in the beneficiary’s life. This way if the guardian or caretaker of the child passes away unexpectedly the trust will serve as a tool to provide for the child beyond the life of their parents or guardians.

How do I create a special needs trust?

Like most legal documents, it is probably best practice to contact an attorney to help create a special needs trust. Specifically, an attorney that specializes in representation of individuals with special needs will likely be well versed in the drafting of special needs trusts. It is important that the trust be drafted correctly because there is certain language that must be included in a special needs trust. A failure to include specific language properly in a special needs trust can possibly invalidate the trust, end benefits for the intended beneficiary, and result in loss of government benefits or tax consequences.

 

Please note that nothing on this post or on this website should be taken as legal advice. If you would like to get more information regarding special needs trusts, please contact at attorney at Montgomery Law today.