Planning for the future can be difficult when you have a child or other relative with special needs. While you want to ensure their needs are met, you know that the special needs person cannot necessarily manage their own finances or assets and that your resources may not be enough to meet all of their needs. How do you plan so your loved one has access to the resources you want to gift on their behalf without disqualify them from needs based federal, state and county benefit programs upon which they depend for basic needs such as food and shelter?
A special needs trust -- also sometimes known as a supplemental needs trust -- can be a smart, sound option for loved ones who have a mental or physical impairment. This leaves a special needs adult or child with the maximum benefit of a regular inheritance or gift, but without potential complications.
The basics of a special needs trust.
Unlike a regular trust -- which can include real estate, financial resources, or any other property directly in the hands of an individual for their own uses -- a special needs trust designates an individual, or “beneficiary,” who will benefit from the trust, but who is not in control of the assets. Rather, another individual is designated as the “trustee” to administer the trust. In this arrangement, the trustee manages the assets for the beneficiary but the property held in the name of the trust is not considered part of the property owned by the beneficiary. As a result, the assets are protected.
Selecting a reliable person to manage the trust is crucial because trusts routinely function on the honor system despite laws that impose duties on trustees to ethically carry out the trust’s terms. In most cases there is no court supervision. Further, the duties of a trustee require a unique balancing act in caring for the beneficiary, fiscal responsibility, an ability to understand SSI and Medicaid laws and more.
Special needs trusts protect loved ones.
Simply leaving your assets to a special needs person out right may seem like the most generous and caring course of action, but if the inheritance disqualifies your loved one from crucial government programs, like Social Security or Medicaid, it can leave them without the necessary resources they need to survive. Rather, a special needs trust can ensure that your loved one receives the full benefit of your gift without it adversely affecting their eligibility to receive the care and attention they need from these programs.
For special needs loved ones, planning for the future is critical
Even if your loved one may not need government services or other benefits which may be impacted by inheriting your assets, a special needs trust can still offer critical protections for children and relatives who are otherwise unable to manage their own finances.
Additionally, establishing a special needs trust even when resources are available can ensure that, in the event your loved one does at some point require government assistance, they can still qualify.
Special needs trusts can also protect against disinheritance. Leaving money to a non-special needs sibling or other relative without a designated trust can leave finances and other assets in limbo; if the family member who inherits the money gets divorced or is involved in an accident and must pay liability, those assets may be claimed -- leaving your special needs relative with little to no protection.
You have gone to great lengths to offer the utmost care and protection for your special needs family member -- so why leave anything to chance after you’re no longer around? With a special needs trust, you can ensure that your loved one is protected to the highest degree possible, and that they’ll be able to live their happiest, most bountiful life, even in your absence.
Have questions about Wills, Trusts and Estate Planning in Washington State?
The Estate Planning and Probate attorneys at Tarutis | Brunstrom in Seattle, Washington can help navigate you through this process so that estate planning is straightforward, effective, and can be completed promptly and appropriately. To learn more about the services we offer throughout all of Washington, or to schedule a consultation, please call (206) 223-1515 or complete our online contact form.