Estate Planning for Special Needs Individuals

Estate Planning is important at any chapter in life; however, it becomes even more vital when you have a loved one that has special needs. Putting the right plan in place means you can be certain that you’ve done everything in your power to safeguard them even when you’re no longer there. A Special Needs Trust (SNT) is an Estate Planning device that lets you better safeguard loved ones without putting their eligibility for government-provided benefits, such as Medicaid and Supplemental Security Income (SSI) in danger.

Attempting to plan for a future you have no control over can feel overpowering. If you need to create an SNT for your loved one, or when you have a SNT and have questions, we can help.

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Long Term Planning

It can be challenging for families to look towards the future and think about what happens when a primary caregiver(s) is no longer able to care for their loved one, but planning for the future can stop errors later on that could adversely affect benefits and cause disagreement.

As an example, it might not be wise to list an individual with special needs as a beneficiary on a parent’s retirement and financial accounts. When the assets go to their child, that could hinder their capability to get Social Security income for disability benefits.

What is a Special Needs Trust?

A Special Needs Trust is a certain kind of Trust that is established to take care of any individual that has a disability. The Trust can supplement public benefit installments without risking eligibility for such benefits.

Among the most important factors of this type of Trust is that it enables a physically or mentally disabled individual to the accessibility of the assets without the Trust’s worth impacting or decreasing government aid. It additionally adds a layer of safeguarding from the government trying to access funding from inheritances or additional sources.

Setting Up Special Needs Trusts For Disabled Loved Ones

Third Party Trusts – These types of special needs trust are typically utilized in a Medicaid setting not for the grantor of the trusts benefit, but for the beneficiary.

First Party Trusts – These types of special needs trust are one that is funded with assets that belong to a special needs beneficiary

Pooled Trusts – These types of special needs trusts are established and overseen by a non-profit entity for the benefit of several beneficiaries.

How does a Special Needs Trust Work?

These trusts work like other Trusts – you need to set it up and fund it prior to it holding any power.

Establishing a Special Needs Trust:

Devise the Trust document
Being the Grantor (or Settlor, the individual devising the Trust), you are going to name someone to manage the assets in the trust
You are able to be the Trustee and the Grantor
Appoint a Successor Trustee to take over in the event you become debilitated or once you meet your demise
Appoint the individual with special needs as beneficiary of the trust
Upon signing and having it notarized, the Trust goes into effect

Funding a Special Needs Trust:

You are then going to receive a Trust Tax ID number from the Internal Revenue Service
You then can include assets into the trust
You will receive a Trust Tax ID number from the Internal Revenue Service
Other portions of your Estate Plan (Revocable Living Trusts, beneficiary designations, Wills, etc.) can fund the Trust, along with financial institutional accounts and other assets or property

Maintaining Eligibility for Government Benefits

A special needs trust is a kind of trust intended to benefit individuals that have disabilities at the same time retaining their eligibility for governmental benefits. These trusts can be a useful device for families of individuals that have special needs, as they enable them to care for their loved ones without risking their ability to receive government aid.

Providing Long Term Financial Security for Individuals with Special Needs

Equally first party and third-party special needs trusts must restrict the payments made through the trustee to or for the benefit of the special needs beneficiary, meaning that the trust property must only be used to supplement, not substitute, what the special needs beneficiary is getting by means of government assistance.

A special needs trust (SNT) is a legal means that enables funds to be earmarked for a person with a disability. It is designed to help preserve the funds for the individual, at the same time protecting their access to public benefits. This trust can be devised by or for any person that has a significant disability, as defined by Social Security Administration regulations. These regulations include individuals with a wide multitude of physical, mental, and developmental issues, like (but not limited to) Alzheimer’s, autism spectrum disorder, dementia, multiple sclerosis, heart conditions, diabetes, loss of vision and bouts of depression.

Creating a third-party special needs trust as part of your estate plan is how you can provide for your loved one that has a disability or special need. An appropriately drafted and funded special needs trust can guarantee that your loved one is eligible for possible government assistance at the same time having funds for supplementing that assistance.

Arizona Family Law

Naming guardians in your will can be part of your estate plan. You may think you’re too young or don’t have enough money to justify the expense, but if you have children, you have priceless assets. There are many considerations when naming guardians for your kids. However, the process doesn’t have to be expensive or complicated.

There’s nothing better than the peace of mind you will have knowing you’ve protected your family at a time when they need it most. Let us help. Schedule a consultation or contact Ogborne Law, PLC of Arizona today.