A
special needs trust, or SNT, often remains a mystery even to the individuals
who need it the most. A special needs trust is designed to benefit individuals
with physical or mental disabilities who are deemed unable to manage their own
finances. Parents, siblings, grandparents, and other family members may set up
a trust for an individual who would benefit from financial assistance.
Are
you thinking about establishing an SNT for a loved one? Understanding the
important components of a special needs trust is critical for ensuring you do
not break any rules or negatively influence your loved one's benefits.
The
first term you need to understand is trust. When one party manages property,
like money or real estate, for another party, it is through a trust. The
individual who manages the property is known as the trustee, and the person who
benefits from the property is the beneficiary.
A
trustee is often a family member who is deemed trustworthy of managing the
funds in the trust, but the trustee can also be a third party appointed by the
court. The trustee has a lot of responsibility, so they absolutely must be
somebody you can count on.
Lastly,
you need to understand the steps involved in leaving money to a trust. Many
people have money put into a trust when they pass away or know that they may
pass away soon. The goal is to ensure that an individual is cared for even if
you are no longer alive.
At
this point, you may be wondering why a special needs trust is necessary. The
reason is simple. Individuals who qualify for Supplemental Security Income,
Medicaid, and other subsidized living could see their benefits negated if they
receive a high inheritance.
However,
if you were to pass away and leave behind property to the trust, it would not
affect your loved one's ability to be eligible for benefits like SSI and
Medicaid. They would not have to worry about their basic needs being cared for.
Since
your loved one is not able to receive money directly from the trust, the
trustee will ensure that the money is used in accordance with the law. Your
loved one can never receive cash directly from the trust, but they can receive
goods and services purchased by the trustee.
A
special needs trust can pay for personal care attendants and physical
rehabilitation. The money can also cover medical and dental bills that would
otherwise be out-of-pocket costs. Depending on your loved one's disability or
special needs, having this extra money can be life-enhancing.
Special
needs trusts also cover education, meaning the trust could allow your loved one
to go to school while disabled. A trust can even pay for home furnishings,
recreation, and vehicles, so long as the beneficiary is given the items or
services rather than cash to buy these items.
Ultimately,
it is important to remember that a special needs trust is not a replacement for
basic support. Rather, it is a form of supplemental income. The trust cannot
pay for groceries, rent, taxes, or utilities without impacting benefits.
While
it is not legally mandatory to have a special needs trust overseen by an
attorney, specific language is required to establish a trust. Situations like
yours can be quite complicated, so hiring an attorney is a good idea.
The Law
Office of Carla D. Allen offers legal services to
individuals thinking about establishing a special needs trust. Call our office
today to discuss the benefits of setting up a special needs trust for your
loved one.
