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Friday, July 6, 2018

Special Needs Trusts Protect The Special People In Your Life

If you have a loved one with special needs, you already know that the benefits they receive from the government are both amazing and completely inadequate. Your loved one would not have the quality of life they currently enjoy without receiving government benefits, but the benefits only provide for very basic needs.

You likely supplement the government benefits, but understand there are rules you must follow in order to preserve your loved one’s eligibility. The need to carefully manage your loved one’s benefits and care while providing them with the highest quality of life possible will not end when you pass away. Therefore it is important to do what you can now to plan ahead for the time when you will no longer be there.

The best way to do this is to set up a special needs trust. A special needs trust is a trust designed to hold assets that can be used to better the life of your loved one without making them ineligible for government benefits like Supplemental Security Income (SSI), Medicaid, Section 8 Housing, and food stamps.

It is necessary to set up such a trust because a person who relies on government benefits will lose their eligibility if they suddenly inherit money or other assets. They would need to spend all of the assets they have inherited — and enroll in different insurance, and get different doctors, and find different caretakers or career programs, etc. — before once again becoming eligible for government-provided benefits.

With a special needs trust in place, your loved one can inherit assets indirectly by serving as the beneficiary of a special needs trust. He or she will never take ownership over the assets held in the trust, but will be able to benefit from their use. When drafted and administered properly, these trusts preserve eligibility for government programs while providing the means for getting extra care and support.

So long as the trust beneficiary is the one benefiting from the trust’s expenditures, and any payments are going directly to third parties, you can really get creative with the goods, services, and activities provided to your loved one.

Permissible trust distributions include:

  • School tuition, books, and supplies

  • Health & life insurance

  • Entertainment (books, movies, audio, video)

  • Bus passes

  • Purchase & maintenance of a vehicle

  • Payment to third parties for home repairs and improvements

  • Household goods

  • Cleaning supplies

  • Medical costs not covered by the government

  • Massages

  • Home care services not covered by other programs

  • Medical equipment

This system works because the relevant government agencies have decided it should. However, there are strict laws that need to be followed when the trust is created and as the assets in it are used. One slip-up could make your loved one ineligible for government benefits or force the trust to reimburse the government for certain benefits it provided. It is therefore important to work with an experienced estate planning attorney who knows how to take full advantage of the laws governing the use of special needs trusts.


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Monk Law Firm, PLLC assists clients throughout Charlotte, Rock Hill, Fort Mill and the surrounding areas.



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| Phone: 803-594-4453
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| Phone: 704-369-9977

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