A critical aspect of the planning is to arrange for the smooth transition of the guardianship to a successor. A Special Needs Trust is a trust created for a chronically disabled beneficiary, which supplements government benefits like Medicaid. Medicaid and other government benefit programs consider the resources and income of an individual to determine eligibility and the amount of such assistance.
Special needs trusts allow a disabled beneficiary to receive inheritances, gifts, lawsuit settlements, or other funds and yet not lose his or her eligibility for certain government programs. Such trusts are drafted so that the funds will not be considered to belong to the beneficiary in determining eligibility for public benefits.
Special needs trusts are designed not to provide basic support, but instead to pay for comforts and extra items that cannot be paid for by public assistance funds. These trusts may pay for things like education, recreation, counseling, and other things beyond the simple necessities of life. However, the trustee can use trust funds for food, clothing, and shelter if the trustee decides doing so is in the beneficiary’s best interest despite a possible loss or reduction in public assistance. Special needs can include medical and dental expenses, annual independent check-ups, necessary or desirable equipment training and education, insurance, transportation, and essential dietary needs. If the trust is sufficiently funded, the disabled person can also receive spending money, electronic equipment and appliances, computers, vacations, movies, and other life enhancing expenses.
A special needs trust is a significant part of a comprehensive estate plan. These issues should be evaluated with your estate planning attorney.
Author: Attorney John S. Polgrean