Ensuring that a child has a secure financial future is a big challenge all by itself. The issue is even scarier to think about when a child has special needs. In these cases, parents often wonder who will care for their child and how the child’s needs will be met after they’re not around anymore.
This is special needs planning: estate planning for individuals with special needs. For many families, this process often includes a Special Needs Trust (or SNT). A SNT is an important part of special needs planning, as it allows people to help set up funds to care for disabled loved one while also preserving their access to important government benefit programs like Medicaid or SSI.
The general structure of a SNT is this: A person wants to leave money for the care of a disabled person. Instead of simply leaving them a sum of money in their will, the person creates a SNT for the benefit of a disabled person. The person creating the trust is called the Grantor, and the disabled person is called the Beneficiary. The SNT also appoints one or more people to serve as Trustees. A Trustee is a person in charge of managing the SNT. Once the SNT is created and the Grantor funds it by placing assets (cash, property, etc.) into the SNT, the Trustee can then use the SNT’s assets to help pay for the Beneficiary’s needs. Most importantly, assets placed in the SNT are not counted as being owned by the Beneficiary, which means the SNT’s assets won’t disqualify them from receiving benefits like Medicaid or SSI.
The benefits of a SNT are numerous:
- A person can leave funds to a special needs individual while still preserving that individual’s access to programs like Medicaid or SSI.
- The SNT can pay for care and services above and beyond what government benefits pay for.
- The funds in the SNT are protected from creditors, so if someone sues the Beneficiary of the SNT, any judgment resulting from the suit couldn’t touch the funds in the SNT.
- A SNT ensures that the funds will be managed by a competent, responsible person (the Trustee) who will use the funds for the Beneficiary’s care; this is vitally important, as often special needs individuals wouldn’t be able to manage the money properly themselves, or could be influenced or taken advantage of by other people trying to con the special needs individual out of their money.
This is just a general description of SNTs; there are different types of SNTs that should be used in different situations, and each comes with their own pros and cons. If you have a special needs person in your life, we would be happy to sit down with you and discuss how special needs planning can help make sure that they’ll be taken care of, regardless of what the future may bring. Please call us at (850) 607-7890 or contact us to schedule a consultation. We look forward to talking with you!