When Is a Special Needs Trust Needed?

This is an article from the Law Offices of Kobrick & Moccia (https://www.kobricklaw.com/) in Garden City, New York, that we thought others may find helpful.

As the parent, caregiver, or extended family member of a child with special needs you undoubtedly know that providing for a special needs individual can be costly; yet, the rewards can be invaluable. Many of the financial considerations involved with caring for a special needs individual make estate planning more complicated while at the same time more important. Failing to plan ahead can result in your special needs child losing much needed benefits from state and federal assistance programs. One common addition to an estate plan for a parent of a special needs child is a special needs trust. If you are the parent of a special needs child you may be wondering “When is a special needs trust needed?”

A special needs trust, also referred to as a “supplemental needs trust” is a trust that is specifically designed to be used for a special needs beneficiary. When properly drafted, a special needs trust will protect assets intended to be used for the benefit of a special needs individual while ensuring that those same assets do not cause the individual to lose eligibility for assistance programs such as Medicaid, SSI, or SNAP benefits.

Federal and state assistance programs typically have a relatively low asset limit that cannot be exceeded by a program recipient. This can create a problem for parents or other loved ones of a special needs individual who wish to provide financially for the individual now or in the future. A well-meaning loved one, for example, could gift assets to the individual in a Last Will and Testament; however, instead of helping to provide for the beneficiary, the gift could actually cause the special needs beneficiary to lose his or her eligibility to assistance programs because the well-intentioned gift caused the beneficiary’s countable assets to exceed program limits.

If you wish to leave behind assets that can be used to care for your special needs child, a special needs trusts may be the answer. Both state and federal agencies will not count assets held in the trust as countable resources when determining eligibility for assistance programs. It is crucial, however, that you create your special needs trust early on and that the trust is drafted properly by an experienced estate planning attorney to ensure that your child benefits from the trust without losing benefits.