How a Special Needs Trust Can Benefit You and Your Family

special needs, DuPage County estate planning attorneysIt can be terribly challenging to plan for a time when you are not around to care for your loved ones. However, facing this reality by making an estate plan is one of the most selfless actions you can take. This is an especially true if you have a child, sibling, or other close loved one who has a serious disability. If you have been responsible for caring for a loved one who cannot care for himself or herself, you may want to find a way of providing for him or her after you pass away. One way to do just this is through an estate planning tool called a special needs trust.

Planning for the Care of a Loved One with Special Needs

A special needs trust or supplemental needs trust is an estate planning instrument that can be critically important to individuals who have a disabled loved one in their care. This instrument works by allowing the caregiver to place funds in the trust, which can then be used for the future care of their disabled loved one. A special needs trust allows you to put aside money for your loved one without affecting the disabled person’s eligibility for government assistance programs. Special needs trusts can be funded through gifts and inheritances or a lump-sum settlement. Without a special needs trust, money left to your loved one could potential disqualify him or her for certain government aid programs.

Leaving Money to a Loved One Could Increase His or Her Available Assets Too Much

The majority of government-funded aid is distributed to individuals under a certain income level. For example, Medicaid, Supplemental Security Income, and housing subsidies all have income criteria that a person must meet in order to qualify for the financial assistance. If you leave money to your disabled loved one without the appropriate estate planning instrument, it could be counted toward his or her available assets. If the funds are substantial, this money could bump your loved one’s income up to a level which makes him or her ineligible for programs with income or asset limits.

A properly-drafted special needs trust helps you ensure that your disabled loved one will receive the funds he or she needs in a way that does not jeopardize participation in other government assistance programs. Ideally, a special needs trust will help your disabled family member enjoy a high quality of life even after you have passed away.

Contact a Wheaton, Illinois Estate Planning Attorney for Help

Drafting a special needs trust or other estate planning instrument can be quite complex. For quality legal assistance from a knowledgeable DuPage County estate planning lawyer, contact Stock, Carlson, Oldfield and McGrath LLC. Schedule a consultation by calling 630-665-2500 today.

 

Sources:

http://www.americanbar.org/content/dam/aba/publishing/rpte_ereport/te_lewis.authcheckdam.pdf

http://www.americanbar.org/newsletter/publications/law_trends_news_practice_area_e_newsletter_home/0501_estate_financialplanning.html

Special Needs Trusts: Securing the Future of a Special Needs Child

special needs trusts, Wheaton estate planning attorneysAccording to the 2010 U.S. Census Bureau, Americans with Disabilities Report, nearly one in five families are caring for a family member with a disability. Equating to about 56.7 million people, or 19 percent of the total population, the U.S. has witnessed an increase in those with qualifying disabilities by 2.2 million citizens. Not only has the number of those with disabilities risen, but the number and percentage of those requiring assistance has also increased.

The report also relates that four in 10 individuals with a disability, ages 21 to 64, often find themselves unemployed and facing persistent poverty levels as the ability to obtain viable employment opportunities may be out of reach.

As reported, one in every 26 American families are facing the challenges of raising a child with special needs, and 69 percent of those caring for a child report that they are concerned about providing lifetime care for their dependents with special needs.

With data derived from a recent MetLife Survey, “The Torn Security Blanket: Children with Special Needs and the Planning Gap,” it is apparent that preparation for future needs is somewhat lacking as disabled children grown into disabled adults. The report found the following statistical information:

  • 88 percent of parents have yet to draft a trust to preserve supplemental benefits;
  • 84 percent are without a letter of intent, outlining a child's future health directives;
  • 26 percent of parents have not created a special needs trust;
  • 76 percent have not identified or named a trustee; and
  • 49 percent have not identified or appointed a legal guardian.

Often, time is not on their side, as 32 percent of all parents caring for a special needs or disabled child often spend more than 40 hours per week ensuring that the child's needs are met and further compounded by 59 percent of parents claiming unfamiliarity with their legal options.

At the Illinois law office of Stock, Carlson, Flynn & McGrath, LLC, our experienced Wheaton estate planning attorneys understand your time is limited. With over 30 years of special needs trust experience, we can advise you on the many different types of trusts that may best suit your dependent's needs as well addressing guardianship directives. Contact our legal team at 630-665-2500 to schedule your options today.

Special Needs Trusts

Many people do not think about planning for their estate until they reach middle-age, but life is different for people with disabilities. Many people create trusts in their older age to clearly state what will be done with their money, assets and other belongings, along with funeral and death arrangements.

Special needs trusts provide for the needs of disabled people without creating a situation in which the disabled person loses government benefits such as Social Security and Medicaid. Special needs trusts appoint a trustee, just like any other trust, to be in charge of making sure everything goes correctly as stated in the trust.

LucyThe World institute on Disability has also helped to clarify a concern of many people who have a disabled family member. The government says that disabled people who receive government benefits cannot have trusts, however, a special needs trust does not belong to the special needs person.

The special needs person is only nominated as a beneficiary of the trust by the trustee, who establishes and administers the trust.

There are three types of special needs trusts:

Family-Type Special Needs Trusts:

For this type of trust, the parents provide the money and sometime purchase life insurance that will be paid into the trust. A living trust allows the people named in the trust to access the money before the "owner" of the trust dies. This type of trust is also good if any other relative wishes to contribute. The trick, though, is that this money cannot be used for housing, food or clothing, which should be covered by Social Security and Medicaid as basic needs.

Court Ordered Special Needs Trust:

Special needs trusts may be ordered by the courts if a disabled person inherits money or receives a court settlement. This requires a special trust because the person actually owns the money. Only a parent or legal guardian of the disabled person can set up this type of trust.

The disabled person must be under the age of 65 and meet certain standards set by Social Security in terms of his or her disability for this trust.

Pooled Special Needs Trust:

The third type of trust must be created by a non-profit association and can be added to by anyone, including the disabled person for whom the trust is set up. This is a large trust for many people, but each disabled person has his or her own account.

This may also be a simpler way to go, because the non-profit organization that sets it up does all of the necessary tax work, takes care of investment decisions, and functions as the trustee.

If you have a disabled family member and you are thinking of helping him or her to create a trust, consider speaking with an estate planning attorney for help. Attorneys at Stock, Carlson, Flynn & McGrath, LLC can help you set up a special needs trust today.