Question: “My wife and I (who are in our 60s) have been encouraged to set up a Special Needs Trust for our disabled adult child. Could you please tell us why this would be necessary? Also, could you please provide us with a little background information on this type of legal instrument?”
Answer: Among the many challenges facing parents of children with special needs is planning for the time when the parents will no longer be around to act as the primary caregivers. Advance planning by parents can make all the difference in the life of the child with special needs, as well as for siblings who may be left with caretaking responsibilities.
A Special Needs Trust for your disabled child should be part of an overall plan for your child. If the parent is the legal guardian for the disabled child, it is essential as part of the planning is to arrange for the orderly transfer of the guardianship to a successor. A Special Needs Trust is a trust created for a chronically disabled beneficiary, which supplements government benefits like Medicaid. Medicaid and other government benefit programs consider the resources and income of an individual for purposes of determining eligibility and the amount of such assistance.
With a Special Needs Trust, however, someone may establish a trust for a disabled individual without jeopardizing that individual’s eligibility for government benefits. Special needs trusts allow a disabled beneficiary to receive inheritances, gifts, lawsuit settlements, or other funds and yet not lose his or her eligibility for certain government programs. Such trusts are drafted so that the funds will not be considered to belong to the beneficiary in determining eligibility for public benefits.
Often, special needs trusts are created by a parent or other family member for a child with special needs, even though the child may be an adult by the time the trust is created or funded. Such trusts are set up as a way for an individual to leave assets to a disabled relative. As their name implies, special needs trusts are designed not to provide basic support, but instead to pay for comforts and luxuries that could not be paid for by public assistance funds.
These trusts typically pay for things like education, recreation, counseling, and medical attention beyond the simple necessities of life. However, the trustee can use trust funds for food, clothing, and shelter if the trustee decides doing so is in the beneficiary’s best interest despite a possible loss or reduction in public assistance. Special needs can include medical and dental expenses, annual independent check-ups, necessary or desirable equipment training and education, insurance, transportation, and essential dietary needs. If the trust is sufficiently funded, the disabled person can also receive spending money, electronic equipment and appliances, computers, vacations, movies, payments for a companion, and other self-esteem and quality-of-life enhancing expenses.
It is important to plan to ensure that your child receives appropriate therapies and medical treatments. It is essential to take the time necessary to find appropriate caregivers who will carry out your wishes and respect your child’s goals, dreams and life expectations. At the same time, Predators are particularly attracted to vulnerable beneficiaries, such as the young and those with limited self-protective capacities. When you plan with trusts, you decide who has access to the information about your children’s inheritance. This protects your child and other family members, who may be serving as trustees, from predators.
It is important that special needs trusts not be unnecessarily inflexible and generic. Although an attorney with some knowledge of trusts can protect almost any trust from invalidating the child’s public benefits, an attorney without special needs experience may not customize the trust to the particular child’s needs, and the child may not receive the benefits that the parent provided when they were alive.
James C. Siebert, Attorney at Law
The Law Office of James C. Siebert & Associates
Arlington Heights, Illinois 60004
Professional Member of the national ElderCare Matters Alliance, Illinois chapter