If you have a family member with special needs, your estate plan may need to include a Special Needs Trust. If you leave a special needs person a lump sum payment to assist with the cost of care, it could make them ineligible to receive government benefits that he/she would otherwise be entitled to receive.
Pursuant to 42 U.S.C. § 1396p(d)(4)(A) and Utah Code Ann. § 62A-5-110, this type of trust allows an individual under the age of 65 years to be provided resources beyond that which Medicaid supplies without disqualifying the recipient from receiving the government benefits. You can create a Special Needs Trust while you are alive, or you can create a will that directs funds to flow into the trust when you die. There are other provisions of law regarding Social Security Disability Income, provisions for health care subsidies, subsidized housing and others which need to be considered in setting up a Special Needs Trust.
If you have a disabled dependent, the creation of a Special Needs Trust can provide your loved one the ability to receive services or have some of the luxuries of life that the government benefits do not cover. This may include specialized equipment, travel expenses for medical appointments, education, therapies, or other similar costs not covered by Medicaid or other programs, including clothing or other needs.
If properly constructed, the assets held by a Special Needs trust are not included when the government determines the individual’s eligibility for benefits because the funds are not available to the beneficiary on demand. Distributions from the trust are given on a discretionary basis by the Trustee.
It is ideal for the trust to have available funds throughout the disabled individual’s life. One common way a Special Needs Trust is funded is by naming the trust as the beneficiary of the parent’s life insurance policy. It is imperative that the trust assets are carefully invested so they continue to grow. Family members and friends can also make gifts to the Trust, including naming the Trust as the beneficiary of their own Will or Trust or even a life insurance policy.
Planning for a loved one with special needs can be complex and confusing and Special Needs Trusts require specialized knowledge. Let us help. The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.