You may have a mentally disabled, a/k/a “special needs,” person in your family who will never be able to hold down a real job or otherwise be self-sufficient. Mentally disabled people usually are not able to responsibly manage their own finances either. By the time mentally disabled people turn 18 (at the latest), they will probably qualify for SSI (Supplemental Security Income), Medicaid and other government programs that they likely will have to depend on to support them for the rest of their lives. However, government programs don’t pay for everything. For instance, Medicaid does not pay for adult dental services. And, if a special needs person suddenly comes into money ($2,000.00 or more) by way of a gift or inheritance, then he or she will lose eligibility for government assistance until after the money has been spent.
What is the answer to this dilemma? A special needs trust, also known as a supplemental needs trust, which allows you to leave money with a third-party “trustee” to be used to help fill in the gaps that the government programs leave.
How a Special Needs Trust Works
With a supplemental needs trust, you won’t be leaving an inheritance directly to your special needs loved one. You will be leaving it “in trust” with a trustee you choose, to be used for the benefit of your special needs loved one, but not for basic food, clothing, shelter or medical care that is covered by a public benefit program for which your special needs loved one qualifies. When a need is identified that is not covered by any public benefit, the trustee can spend monies from the special needs trust to meet that need – but without giving the money directly to the special needs person to make sure that he or she doesn’t lose eligibility for public assistance.
Benefits of Setting Up a Special Needs Trust
In addition to enhancing the quality of life for your special needs loved one without causing him or her to lose eligibility for public assistance, a special needs trust also serves to ease the potential financial and other burdens on other members of your family, such as the siblings of a special needs child, from looking after your special needs loved one when you no longer are around to do it.
The funds are also safe from creditors. In the event a judgment is granted against your loved one, no money from the trust will go toward the debt – even if there’s more than enough to pay the creditor and still provide the necessary supplemental support.
Does Drafting a Special Needs Trust Require an Estate Planning Attorney?
A special needs trust must be properly drafted to protect your loved one’s right to receive government benefits. As a result, you’ll want the assistance of an experienced estate planning attorney.
Do you have questions about estate planning? The legal team at J.D. Milliner & Associates, P.C., based in the Sugarhouse area of Salt Lake City, can provide you with answers and draft a comprehensive estate plan that protects your family after your death.
J.D. Milliner & Associates serves clients throughout the entire state of Utah, and our highly experienced Utah estate planning attorneys offer free consultations. To learn more about our law firm, or to discuss setting up a special needs trust, contact our office today.
NOTE: This article is for informational purposes only and should not be construed as providing legal advice. Use of this site does not create an attorney-client relationship. Contact an attorney to obtain legal advice.