Love Isn’t a Financial Plan
Let’s be brutally honest: love doesn’t cover therapy sessions, adaptive equipment, or long-term care. While your affection is invaluable, it won’t shield your loved one with disabilities from financial hardship. Without proper planning, they risk losing essential government benefits and facing unnecessary struggles.
Enter the Special Needs Trust (SNT)—a legal tool designed to provide financial support to individuals with disabilities without jeopardizing their eligibility for government assistance programs like Medicaid and Supplemental Security Income (SSI). Despite their importance, a staggering number of families lack a comprehensive special needs financial plan. According to a study, only 25% of families have any plan in place for their loved ones with special needs (Special Needs Planning Center).
As defined by the National Law Review, an SNT allows assets to be held in trust and used to benefit a person with disabilities without disqualifying them from public benefits. This ensures access to critical programs while maintaining a better quality of life.
This blog post aims to demystify Special Needs Trusts, highlighting their significance, benefits, and the potential pitfalls of neglecting such crucial planning.
Don’t Plan? Prepare to Fail Your Loved One
Many families operate under the dangerous assumption that their loved one’s government benefits will suffice. However, these benefits often cover only basic needs, leaving significant gaps in areas like specialized therapies, education, and recreational activities.
A study reveals that only 25% of families have any plan in place for their loved ones with special needs (Special Needs Planning Center). This lack of preparation can lead to financial instability and reduced quality of life for the individual.
Example: Consider a family that left a direct inheritance to their child with disabilities. This well-intentioned act inadvertently disqualified the child from receiving Medicaid benefits, leading to significant out-of-pocket expenses for medical care.
To avoid such pitfalls, it’s essential to engage in comprehensive estate planning that includes the establishment of a Special Needs Trust.
A Trust Keeps the Lifeline Intact — Don’t Sever It
Thinking you can “just leave money” to a disabled family member? Think again. Special Needs Trusts allow individuals to receive inheritance or support without losing access to means-tested benefits. This is about survival, not luxury.
For instance, to qualify for SSI, an individual must have less than $2,000 in countable resources (Social Security Administration). An SNT ensures that any additional funds are managed in a way that doesn’t jeopardize this eligibility.
Example: A parent establishes an SNT for their child, ensuring that the child continues to receive Medicaid benefits while also having funds available for specialized therapies and educational programs not covered by government assistance.
For more information on how trusts can be integrated into your estate plan, consult with an estate planning attorney experienced in Special Needs Trusts.
Trust Management Is Not a DIY Job
Appointing a clueless cousin or a well-meaning sibling as trustee might feel right—until it isn’t. The trustee of an SNT holds significant responsibility, managing the trust’s assets and making distributions that align with the beneficiary’s best interests. Selecting the right trustee is crucial to ensure the trust operates effectively and compliantly.
Trustees can be family members, professionals, or organizations. Each option has its pros and cons, and the choice depends on the family’s specific circumstances and the beneficiary’s needs (The Williams Litigation Group).
Example: A family opts for a professional trustee with experience in managing SNTs, ensuring that the trust is administered correctly and that the beneficiary’s needs are met without compromising benefit eligibility.
To understand the nuances of trustee selection and trust management, consider reading our blog on Differences between estate lawyers, trust lawyers, and probate lawyers.
If You’re Not Updating the Trust, You’re Falling Behind
Laws change, lives change—your trust should too. An SNT is not a “set it and forget it” tool. Regular reviews are essential to adapt to changes in laws, the beneficiary’s needs, and financial circumstances (Visalia Probate Law).
A prudent approach is to conduct a formal review at least annually, with more frequent check-ins if circumstances warrant (Tustin Probate Law).
Example: A family revisits their child’s SNT after a change in state laws, making necessary adjustments to maintain the trust’s compliance and the beneficiary’s benefit eligibility.
For guidance on updating your estate plan, including your Special Needs Trust, reach out to our estate planning team.
Prove Your Love with a Plan
If you truly care about your loved one with disabilities, don’t just show it—prove it. Set up a plan that works. Create a Special Needs Trust that ensures they’re protected long after you’re gone. Because love isn’t just about hugs. It’s about hard decisions.
By understanding the importance of SNTs, selecting the right trustee, and committing to regular reviews, families can provide their loved ones with a secure and enriched future.
To take the next step in securing your loved one’s future, contact us to schedule a consultation with our experienced estate planning attorneys.
