SPECIAL NEEDS TRUSTS

FINANCIAL ASSISTANCE for DISABLED PERSONS WITHOUT JEAPORDIZING GOVERNMENTAL ENTITLEMENTS
Many persons have loved ones with disabilities. They want to financially assist these disabled person - - but they are concerned about how to do this without jeapordizing government benefits that the person is receiving or might receive in the future.
These questions take on added relevance when doing estate planning. While parents and others often want to earmark funds for the disabled person, they do not want their gifts to replace government benefits - - they want to supplement any government benefits.
SPECIAL NEEDS TRUSTS
The best way to supplement government benefits is to establish a Special Needs Trust -- sometimes referred to as a Supplemental Needs Trust. This type of trust is designed specifically to assure that the disabled person can receive assets without sacrificing government benefits.
SPECIAL NEEDS TRUSTS USING FUNDS FROM A FAMILY MEMBER OR FRIEND
Some families set up a Special Needs Trust during their lifetime to be certain that funds are always available for the disabled person. Others choose to create and fund the Special Needs Trust as part of their Will. These trusts are referred to as a Third Party Special Needs Trust. In setting up a Special Needs Trust, it is essential that parents and other interested parties specifically provide for this in a Will or Trust. If the donor's intentions are not adequately expressed, there is an assumption that he does not want to establish a Special Needs Trust and the funds could be a factor in terminating government benefits.
SPECIAL NEEDS TRUST USING FUNDS OF THE DISABLED PERSON
If a disabled person has funds of his/her own, he can fund his own trust. This is referred to as a First Party Supplemental Needs Trust. The funds might have come from a lawsuit. The funds might have come from a gift or inheritance where the donor did not adequately express the intention to establish a Supplemental Needs Trust. A First Party Supplemental Needs Trust using the disabled person’s funds has different rules from a trust established by a friend or family member. In addition, the rules differ for persons under 65 years of age and for persons above 65.
Tip
It is important to consult an elderlaw attorney before the disabled person accepts funds in order to structure a trust that will protect assets in the best way possible.
Tip
It is important to consider who will serve as the Trustee of the Supplemental Needs Trust. The Trustee must be capable of understanding how funds can be used without jeopardizing government benefits. He/she must also be willing to devote time to understanding the needs of the disabled person and using the trust funds to meet those needs.