WHY ESTABLISH A SPECIAL NEEDS TRUST?

Estate planning can be a challenge for anyone, but it is particularly important for those who are leaving behind dependents or heirs who have special needs. Did you know that there are special types of trusts that can be set up to accommodate your loved ones’ health needs? That is right, a Special Needs Trust — and many other types of trusts — can be set up to protect assets for those who need ongoing financial care. Trust administration must be properly established, however, to ensure that the beneficiary gets the most out of the estate planning setup.

Special legal considerations were passed by our national legislature in 1993 for the benefit of those Floridians and other Americans with disabilities. Under the Omnibus Budget and Reconciliation Act, trusts created for those with disabilities — and that meet certain code requirements — are not considered countable resources when it comes to calculating SSI and Medicaid qualification. Further, if additional assets are added to a trust, the disabled recipient will not be subject to a period of ineligibility for their Medicaid or SSI benefits.

Special needs trusts are critical for those with disabilities because they preserve the individual’s eligibility for government benefits such as Medicaid. The funds in the trust — which are designed to pay for additional medical care — do not count against the person when he or she applies for government financial assistance. Further, the trusts allow the person with special needs to enjoy a higher quality of living, rather than simply getting by day-to-day and having access to fewer options. Trusts can fund better transportation options and higher-quality home care, for example.

Benefactors can use trust administration rules to provide benefits for their special needs relatives, or even someone for whom they have no legal responsibility to provide care. The benefits of a revocable trust versus an irrevocable trust should be discussed with a qualified attorney and financial planner. Make sure you are abiding by all required compliance matters, and your beneficiary is far more likely to receive the maximum benefit from the trust you create.

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Written by Luis E. Barreto

Luis E. Barreto

Luis is a probate and guardianship litigator with over 23 years of experience in the field. Determination of heirs, will contests, breaches of fiduciary duty, removal of personal representatives, guardians and trustees are just some of the types of litigation he addresses. In addition, he administers non-contested estates and guardianships.