FREQUENTLY ASKED QUESTIONS

A special needs trust is a legal document, developed by a knowledgeable attorney that protects the assets of a person with a disability. With a special needs or supplemental needs trust, a person with a disability can continue to qualify for government benefits that are depending upon income and assets.

If you have a disabled family member that depends upon Supplemental Security Income (SSI) and/or Medicaid for income and health insurance, these programs look at an individual’s income and assets to determine qualification. If your family member inherits or receives a large inheritance, gift or proceeds from an insurance settlement directly, it can affect their receipt of government entitlements and government health care programs. In addition, individuals with disabilities sometimes lack the ability to be able to handle large amount of funds. This lack of ability can put them at risk.

A Special Needs Trust requires you to name Trustees who will oversee the administration of the trust according to your wishes. The Trustee(s) can be family members, friends, an attorney or a non-profit corporation whose specialty is working with persons with disabilities. The Trustee dispenses the funds (never directly to the individual trust beneficiary) on behalf of the beneficiary for things over and above food, clothing and shelter. Some examples include the purchase of needed furniture, items for entertainment and vacations.

Typically, special needs trusts are funded by the estate of parents or other family members of persons with a disability. These are called “testamentary trusts”. Trusts can also be funded by parents or others while they are alive to see to supplemental needs.

While individual family members or friends serving as trustee(s) may pass away or otherwise be unable to continue to serve, organizations exist in perpetuity and can continue to provide this service throughout the beneficiary’s lifetime. Likewise, an organization is likely to be connected to the proper informational channels and be appraised of changes in the laws affecting this area.

Thinking about doing a special needs trust is the first step. Once you have decided to protect the assets of your loved one, you should contact an attorney that specializes in disability law, estate or trust planning. The rules can be complicated; therefore it is essential to seek out the services of a specialist. Prices to set up the proper documents can vary widely. TLC Trust maintains a list of qualified attorneys and financial planners, so feel free to contact us for more information.