Special Needs Trust – Important Info You Need to Know

If you are a caretaker for a loved one with special needs, you may be concerned about what will happen to them if you were to suddenly become incapacitated or pass on. This concern is perfectly understandable. You want to make sure that your loved one is taken care of and receives the benefits they rightly deserve.

Enter the Special Needs Trust (also known as a Supplemental Needs Trust). This is an estate planning mechanism that can prove invaluable when caring for a loved one with special needs. Each state, including Missouri, has its own set of laws regarding the establishment and use of a special needs trust.

Creating a special needs trust may seem a bit complicated, but the benefits financially and legally with this type of trust may outweigh the burden associated with creating the trust.

Why You Should Consider a Special Needs Trust

The objective of a special needs trust is to supplement the government benefits for your loved one, not replace them. It can help your loved one remain eligible for specific government programs (e.g., Medicaid or Social Security Supplemental Income) and help provide for other services and care.

Benefits Associated with a Special Needs Trust

The funds you use to create the special needs trust are tax-deductible. The trust funds are not accessible to creditors, even if a judgment is filed against you. Also, the directive of the trust will make sure that the funds are used for the care and needs of your loved one.

This trust will act as a supplement to the funds received by the government rather than using the trust funds solely for support.  The trust can help pay for services and equipment that Medicaid does not cover, including:

  • Purchase of a home;
  • Special wheelchairs;
  • Vehicles with handicap access;
  • Personal assistant

As you can see, a special needs trust can provide the funds necessary to ensure your loved one lives an active and fulfilling life.

How to Set Up a Special Needs Trust

A special needs trust can be a “self-settled” which means the money in the trust belongs to the person with the special needs.  Or, it can be established as a third-party trust, meaning the trust is created and funded by a parent, a spouse, a grandparent, etc.  The person with the disability can benefit from the funds while remaining eligible for government benefits.

A special needs trust needs to be in writing.  You also need to make sure that the trustee of the trust has specific fiduciary duties to the beneficiary of the trust to manage the assets properly and to see that the funds are used for the benefit of your loved one and that their access to public benefits is not hindered by distributions from the special needs trust.

If the trust is funded with the disabled person’s own funds, a “payback provision” is required to assure that the state government will be reimbursed after your loved one’s passing for the expenses paid on their behalf.  If the trust is funded by a third party, such as a parent or other family member, the payback provision is not required.

Have Questions? Contact a St. Charles Trust and Estate Planning Attorney

If you need advice on setting up a special needs trust, do not hesitate to contact Polaris Law Group and St. Charles trust and estate lawyers Scott Stork and Raymond Chandler. Schedule a meeting with Scott or Raymond today by phone or by filling out a quick contact form.

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