Miami, Florida residents may know that many children with physical or mental disabilities may very well outlive their parents, so it is often a difficult task for those parents to make necessary arrangements for a disabled child’s care after their death. Many parents of disabled children create a financial trust so that safeguards are in place for ensuring financial support for a child’s lifetime.
However, parents should remember that creating most kinds of trusts is not a foolproof solution because trust fund may possibly affect some federal and state disability benefits provided to the child. For example, many disabled residents with monthly income below a certain level receive Medicaid and Supplemental Security Income. If a trust provides financial support in excess of these threshold amounts, the beneficiary may no longer qualify for these programs.
In order to address these complicated issues, special needs trusts or supplemental needs trusts are good options. Special needs trusts allow third parties to leave assets and inheritance in a trust fund to benefit disabled relatives without affecting government benefits already received by the disabled beneficiary.
Current laws provide no limits to the amount of money that can be transferred into special needs trusts. However, it is important to make sure that the language of trust documents clearly states that the trust assets are exclusively for supplemental expenses. The money in the trust will be used only for those expenses not covered by Medicaid, SSI and so on. The trust language should also mention that trust payments should only be made after considering all public benefits.
Another advantage of special needs trusts is that assets contained in such trusts are protected from creditors who may have claims against the estate. Divorce or bankruptcy cannot disqualify the disabled recipient from accessing special needs trust assets. Additionally, the trust can be utilized by accepting payments from a personal injury lawsuit and other litigation.
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