Special Needs Planning

ABOUT SPECIAL NEEDS PLANNING

If you currently provide care for a child or loved one with special needs or supplemental needs (such as mental or physical disabilities), it is likely that you are concerned about making sure they have the best life possible, and also what may happen to them when you are no longer able to provide and care for them. 

While you can certainly make sure that they are financially secure, often times providing for the person financially may prevent them from qualifying for essential benefits under the Supplemental Security Income (SSI) and Medicaid programs. However, these public programs and government benefits provide only for the bare necessities such as food, housing and clothing.  But if parents leave any assets to their child who is receiving public benefits, they run the risk of disqualifying the child from receiving them. Fortunately, the government has established rules allowing assets to be held in trust, called a Special Needs Trust or Supplemental Needs Trust for a recipient of SSI and Medicaid, as long as certain requirements are met. 

HOW DOES A SPECIAL NEEDS TRUST WORK?

Our law firm can help you craft a Special Needs Trust so that government benefit eligibility is preserved while at the same time providing assets that will meet the supplemental needs of the person with a disability (those that go beyond food, shelter, and clothing and the medical and long term supports and services of Medicaid). The Special Needs Trust can fund those additional needs. In fact, the Special Needs Trust must be designed specifically to supplement, not replace public benefits. Parents should be aware that funds from the trust cannot be distributed directly to the disabled beneficiary. Instead, it must be disbursed to third parties who provide goods and services for use and enjoyment by the disabled beneficiary.

ARE THERE DIFFERENT TYPES OF SPECIAL NEEDS TRUSTS?

Yes. There are three varieties of special needs trusts.

• Self-Settled Special Needs Trust: This trust is created by the special needs person for his or her own benefit. Pennsylvania must be listed as a beneficiary of the trust for any unspent assets when the trustmaker dies.
   
• Third Party Special Needs Trust: These trusts are created by a third party (i.e., a parent) for the benefit of a special needs person. These trusts need not name Pennsylvania as a beneficiary for unspent funds.
   
• Pooled Special Needs Trusts: Managed by a non-profit organization, a pooled trust is professionally managed for more than one special needs person with a similar special need. The advantage is that the pooled trust organization knows how to manage the trusts, and knows the issues and complexities of the particular special need.

WHAT CAN FUNDS FROM A SPECIAL NEEDS TRUST BE SPENT ON?

The Special Needs Trust can be used for a variety of life-enhancingexpenditures without compromising your loved ones’ eligibilitysuch as: 

• Annual check-ups at an independent medical facility
• Attendance of religious services
• Supplemental education and tutoring  
• Out-of-pocket medical and dental expenses
• Transportation (including purchase of a vehicle)
• Maintenance of vehicles
• Purchase materials for a hobby or recreation activity
• Funds for trips or vacations
• Funds for entertainment such as movies, shows or ballgames.  
• Purchase of goods and services that add pleasure and quality to life: computers, videos, furniture, or electronics.
• Athletic training or competitions
• Special dietary needs
• Personal care attendant or escort
  
  

CONCLUSION

Special Needs Trusts are a critical component of your estate planning if you have disabled beneficiaries for whom you wish to provide after your passing. Generally, Special Needs Trusts are either stand alone trusts funded with a separate asset like a life insurance policy or it can be a sub-trust in your existing living trust. Special Needs Trusts must be crafted carefully. You should not consult with an attorney who is not an expert in drafting Special Needs Trusts.

You can rest assured that your Special Needs Trust will be well crafted by working with us. For your no-obligation complementary consultation, contact our office today at (215) 706-0200 or by emailing us.