Special needs planning often requires more than just creating a special needs trust to ensure your loved one is protected. It involves problem solving and considering issues such as planning financially for a special needs child, determining what community and governmental resources may be available, and who will make legal and financial decisions for the child once he or she is age 18. As a special needs parent, I understand this firsthand and will use my insights and experience to help you work through these issues. For more information, contact me for a free consultation.
Frequently Asked Questions
A Special Needs Trust (also known as a Supplemental Needs Trust) is created so that someone with special needs can continue to receive essential government benefits such as Medicaid and Supplemental Security Income. As explained below, the two types of Special Needs Trusts are first party and third party. A properly drafted first party or third party Special Needs Trust is not treated as a countable resource in determining eligibility for means tested government programs. Given that public benefits programs only provide for a minimal standard of living, having a Special Needs Trust in place can greatly benefit your loved one by providing an enhanced quality of life. A Special Needs Trust must be designed specifically to supplement, not replace, public benefits. Parents should be aware that funds from a Special Needs Trust cannot be distributed directly to the disabled beneficiary. Instead, funds must be disbursed by the trustee to third parties who provide goods and services for use and enjoyment by the disabled beneficiary.
A first party Special Needs Trust is funded with the disabled beneficiary’s own money and must be approved by the Social Security Administration and Medicaid. One of the drawbacks of a first party Special Needs Trust is that it must contain a provision to pay back any state that provided Medicaid benefits to the trust beneficiary during his or her life. This means that money left in the trust when the beneficiary passes away must be used to reimburse the state for benefits paid under Medicaid during that beneficiary’s life.
A third party Special Needs Trust is funded using money from anyone other than the disabled beneficiary. Typically, third party trusts are funded using inheritances or gifts from family members, where the money is put into the trust. Unlike a first party Special Needs Trust, a third party Special Needs Trust is not required to include a provision reimbursing the state for Medicaid benefits provided during the beneficiary’s lifetime.
Once your child turns 18, he or she is considered an emancipated adult. This presents a problem when a child with special needs legally becomes an adult and the parent needs to continue making financial and healthcare decisions for the child. In some cases, a legal guardianship may be necessary in order to continue making those decisions for the child. Anyone, including parents, must petition the courts to be appointed as someone’s legal guardian and demonstrate that person is legally incapacitated A potential alternative to legal guardianship is a power of attorney in which a person gives another the right to make medical and legal decisions on their behalf at a time when the person is unable. The person with special needs must be able to sign and fully understand the power of attorney.
The most important part of any plan for a special needs child is the “Letter of Intent.” A Letter of Intent provides future care providers with the information they will need to know in order to understand the person with special needs. Details about the individual’s abilities, diet, medication, therapy, social activities, mannerisms, etc. are included. The Letter of Intent is not a legal document, but having input and feedback from an attorney can be valuable.