Special Needs Planning
Proper advanced planning for a loved one with special needs is vital. In most cases, it is simply not enough to entrust money to a friend or relative in the hope that they will look after your loved one. For example, the individual holding the entrusted funds could lose them because of bankruptcy or a lawsuit. Moreover, if funds are delivered directly (during your lifetime or through a will) to the loved one with special needs, they are highly likely to lose critical benefits such as Medicaid and Supplemental Security Income (SSI). We can provide guidance and help you protect the funds intended for your loved one, while at the same time preserving his or her eligibility for government benefits. The most common solution to this problem is the creation of a Supplemental Need Trust (SNT).
A Supplemental Need Trust (SNT), sometimes called a special needs trust, is a trust that will preserve the beneficiary’s eligibility for needs-based government benefits such as Medicaid and Supplemental Security Income (SSI). This is allowable because the beneficiary (person with special needs) does not own any of the trust’s assets. As a result, he or she can remain eligible for the benefit they are receiving. The trust is created to provide the payment for items that the government benefits do not provide for, such as costs for companions and dental or medical expenses not covered by Medicare or Medicaid. There are two types of SNTs:
First Party SNT: is funded with assets or income belonging or payable to the special needs individual. Some of the ways these trusts are funded are from personal injury settlements, medical malpractice settlements or inheritances left directly to the beneficiary.
Third Party SNT, is funded with assets belonging to any person other than the beneficiary. Typical funding comes from gifts, an inheritance from parents or grandparents, and proceeds of life insurance policies and can hold any kind of asset imaginable belonging to the family member or other individual, including a house, stocks and bonds, and other types of investments. This trust has no provisions to pay back Medicaid upon the trust’s termination. This means that when the beneficiary with special needs dies, any funds remaining in her trust can pass to other family members, or to charity, without having to be used to reimburse the government.
Naturally, every person with special needs is different and every situation where special needs planning is unique. We would be happy to meet with you to determine which solutions are right for your family and your loved one’s needs.