Trusts are versatile tools that can be used for a variety of estate planning purposes. Trusts can reduce estate taxes, ensure that money from an estate is used for its intended purpose and can protect heirs. A trust is a legal mechanism whereby a grantor uses real estate, money or assets to provide something for a beneficiary, using a trustee to distribute assets according to the provisions in the trust.
Special needs trusts are created to help people with disabilities or mental illness. A special needs trust can help a person with special needs remain eligible for government benefits while providing for a higher standard of living by providing for special or supplemental needs.
Supplemental Security Income and Medicaid are essential for many people with special needs, such as those with autism. However, a disabled individual must meet certain monetary requirements in order to qualify for these benefits. Leaving too much money or too many assets to such a person can mean ineligibility for government services that provide for basic needs. The estate is then swallowed up by food and medical care quickly, and ultimately the person with special needs might again meet eligibility for government programs, but now without any extra assets. A special needs trust maintains eligibility for government services while letting the person with special needs use the estate to improve his or her quality of life.
Special needs trust
A special needs trust is a trust that provides for supplemental needs; thelanguage in the trust must indicate it is for that purpose. A special needs trust can pay for a personal care attendant, insurance, recreation, entertainment and transportation, among others. A special needs trust can be funded by property the beneficiary owns or a third party. Importantly, the beneficiary cannot be able to take funds from the trust. However, that is not to say the beneficiary cannot tell the trustee what he or she wants. For example, a beneficiary could not directly take money from the trust to pay for a vacation, but he or she could tell the trustee what time and where he or she would like to go.
When the trust expires the state has the option to take from the trust the amount it spent in providing basic care. The end of the trust occurs when the beneficiary passes away or the trust loses it remaining funds.
Anyone with questions regarding creating a special needs trust or to verify that a certain activity or use is appropriate for a special needs trust should contact a skilled estate planning attorney.