Special needs planning helps preserve public benefits for beneficiaries with disabilities. A properly designed and administered Special Needs Trust (SNT) can provide funds to supplement the public benefits, such as SSI or Medicaid, of a person with disabilities without interfering with the beneficiary’s eligibility for those benefits.
There are two broad categories of Special Needs Trusts – a General Support Special Needs Trust and a Supplemental Care Special Needs Trust. The former acts as a primary source of benefit for a disabled individual, whereas the latter, the most common type of SNT, acts as a secondary source of support once government benefits are exhausted. Both trusts can either be self-settled by the beneficiary or funded by a third party. However, the decision on who is to fund the SNT is important because a self-settled trust is subject to Medicaid payback when the beneficiary passes away, as well as other contribution limitations. A third-party funded trust has no payback requirement.
Special Needs Trusts can also contain Care Management Provisions, ensuring a beneficiary has a readily available person committed to overseeing the beneficiary’s care after a parent or guardian passes away. A Special Needs Trust management team can also ensure the trust will be carried out to the utmost benefit of the beneficiary. Since SNTs can last a lifetime, many issues may come up, and ensuring a team will be there to make informed decisions for the benefit of the beneficiary can bring peace of mind that your loved one will receive the best care and quality of life that the trust can provide.
Another planning device for a beneficiary with special needs is an ABLE Account, established under the Achieve a Better Life Experience Act. An ABLE account permits individuals with disabilities to save in and withdraw from the account to pay for disability-related expenses. However, ABLE accounts are also subject to limitations on contributions, so it is important to meet with an attorney to see if an ABLE account is the right planning device for your loved one.