Special Needs Trusts & Planning | Snake River Law | Estate Planning & Small Business Attorneys

Caring for a loved one with special needs is a significant responsibility that comes with unique challenges. As a caregiver, you want to ensure that your loved one’s future is secure, even when you are no longer around to provide care. One way to ensure this is through special needs trusts and planning. In this guide, we will discuss the benefits of special needs planning and trusts, the process of setting up a special needs trust, and answer some frequently asked questions.

Special Needs Planning and Trusts: A Comprehensive Guide

Do you have a loved one with special needs? Are you worried about their financial security and medical care after you are gone? Special needs planning and trusts can help ease your worries and provide for their future.

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For many families, caring for a loved one with special needs is a lifetime responsibility. It involves providing not only for their medical needs but also their financial well-being. Special needs planning is a way to secure the financial future of individuals with disabilities by creating a comprehensive plan that ensures they receive the care and support they require. Trusts are a crucial component of special needs planning, offering a way to set aside assets to benefit your loved one without interfering with their eligibility for government benefits.

What is Special Needs Planning?

Special needs planning is a process of developing a financial and legal plan to secure the future of a person with special needs. It involves creating a comprehensive strategy that addresses their financial, medical, and personal needs. The goal of special needs planning is to ensure that individuals with disabilities have the support they need to live as independently as possible and achieve their full potential.

There are several key components to special needs planning, including:

Financial planning: creating a financial plan that considers the costs of medical care, therapies, and daily living expenses.
Estate planning: setting up a will, trusts, and other estate planning tools to ensure that your loved one’s needs are met after your passing.
Government benefits: understanding the eligibility requirements and benefits available to individuals with special needs, such as Supplemental Security Income (SSI), Medicaid, and other federal and state programs.
Caregiving: identifying and selecting caregivers who can provide the necessary care and support for your loved one.

What are Special Needs Trusts?

Special needs trusts are legal instruments designed to provide for the financial needs of individuals with disabilities without jeopardizing their eligibility for government benefits. These trusts can be set up by parents, grandparents, or legal guardians and can be funded with various assets, including cash, property, and investments.

There are two main types of special needs trusts:

Third-Party Special Needs Trusts: These trusts are set up and funded by someone other than the beneficiary, such as a parent, grandparent, or legal guardian.
First-Party Special Needs Trusts: Also known as a “self-settled” trust, these trusts are funded with the beneficiary’s assets. They are typically used when the individual with special needs receives a settlement or inheritance that would otherwise disqualify them from government benefits.

Advantages of Special Needs Trusts

Special needs trusts offer several advantages, including:

Preservation of Government Benefits: Assets held in a special needs trust are not counted towards the beneficiary’s eligibility for government benefits. This allows them to receive much-needed financial support while also benefiting from the assets in the trust.
Flexibility: Special needs trusts can be customized to meet the unique needs of the beneficiary. They can be used to pay for medical expenses, therapy, education, housing, and other expenses that may arise.
Management of Assets: The trustee appointed to manage the special needs trust has a fiduciary duty to act in the best interests of the beneficiary. This ensures that the assets are used for the intended purpose and managed appropriately.
Tax Benefits: Special needs trusts may be exempt from certain taxes, providing an additional advantage for the beneficiary.

How to Set Up a Special Needs Trust

Setting up a special needs trust involves several steps, including:

Determine the Type of Trust: Determine which type of trust is appropriate for your situation. A third-party special needs trust may be suitable if the beneficiary has not received an inheritance or settlement, while a first-party trust may be necessary if the beneficiary has received a settlement or inheritance.
Identify the Trustee: Identify a trustee who will manage the trust. This should be someone who has experience managing finances and is familiar with the legal and financial requirements of a special needs trust.
Draft the Trust Document: Consult with an attorney to draft the trust document. The document should include specific instructions on how the assets should be managed and used for the benefit of the beneficiary.
Fund the Trust: Transfer assets into the trust. This may include cash, property, or other investments.
Manage the Trust: The trustee is responsible for managing the trust and ensuring that the assets are used appropriately for the benefit of the beneficiary.

Special needs planning and trusts are essential tools for providing for the financial future of individuals with disabilities. By creating a comprehensive plan that addresses their unique needs, families can ensure that their loved ones receive the care and support they require. Special needs trusts, in particular, offer a flexible and effective way to set aside assets for the benefit of individuals with disabilities without jeopardizing their eligibility for government benefits. If you have a loved one with special needs, consider speaking with an attorney or financial advisor to explore your options for special needs planning and trusts. Contact us at 208-406-9885 or use the Schedule Now button to set up a meeting to discuss how special needs planning can benefit your family.

Special needs planning and trusts are essential tools for providing for the financial future of individuals with disabilities. By creating a comprehensive plan that addresses their unique needs, families can ensure that their loved ones receive the care and support they require.

Mark Petersen Tweet