Special Needs Trusts

It is critical to establish a Special Needs Trust for your child as soon as possible, even if he or she is too young to qualify for governmental benefits, and even if you are not sure that your child’s challenges will be lifelong.  A "third party" Special Needs Trust can accept gifts and inheritances from family and friends without interfering with your child’s governmental benefits qualification.  Gifts or inheritances given directly to the child, outside the Special Needs Trust arrangement, can cause the child to be disqualified for other benefits or require the child to reimburse the state for services received. You may designate alternative beneficiaries in a Special Needs Trust (such as your other children or family members) to avoid having to reimburse the government for services provided to your child.  Assets of Special Needs Trusts are also protected in a parents’ divorce, serve as a safe vehicle for divorced spouse’s contributions, and are safeguarded from liability. 

Frequently, the individual with special needs has already inherited funds directly, causing them to lose benefits or fail to qualify for future benefits.  Our firm can help these individuals regain eligibility by creating a slightly different type of trust called a "first party" special needs trust.  Your special needs planning attorney can explain the difference between a first and third party special needs trust, and which one is right for you.

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If you have a child with special needs, you may have been given the common advice not to have assets in your child’s name. When a child turns 18, he or she is then a legal “adult” and can then become eligible for various government benefits such as Supplemental Security Income (SSI) and Medicaid (and in some cases, Medicare). However, both of these benefits require that the child own less than $2,000, not just upon turning 18, but for a period of several years prior to reaching age 18, and indefinitely thereafter.  This is where the Special Needs Trust comes in as a planning strategy.

Parents, grandparents, and family friends struggle to understand how they can then gift presently or leave assets to the child in the future without causing disqualification for government benefits. Solution: establish a Special Needs Trust. Parents can then also designate a Trustee who can manage the assets for the child, as well as control the distributions and child’s ability to access the funds.  Trust assets can then be used to “supplement” the government benefits the child is already receiving to maximize the child’s quality of life.

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