If you have a special needs child, you know he or she requires special care -- and that will certainly be on your mind when you do your estate planning. No doubt, you will want to ensure they have someone who will care for them and make sure their special needs are met should something happen to you. Besides just providing a guardian or custodial care for them, they will need to be provided for financially as well.
The best way to do this by creating a special needs trust. If you are not sure what a special needs trust is or how to create one, don't worry; we can help you. A special needs trust is just another kind of trust that puts safeguards in place for you and your loved one. It is sometimes called a supplemental trust.
The biggest benefit of a special needs trust is to protect your loved one from losing any government benefits he or she may be receiving, such as Supplemental Security Income, or more importantly, Medicaid benefits. If your special needs child has money or assets of his or her own that meet or exceed the amount allowed to be eligible for government benefits, his or her benefits could be stopped until his or her net worth is under the allowed amount. For instance, if they inherit more than $2,000, they could be found ineligible for SSI and Medicaid benefits until they have used up their own resources.
Special needs trusts are often drawn up when a special needs individual comes into a large sum of money, either from a settlement -- such as a malpractice or personal injury lawsuit -- or from an inheritance. Setting up a special needs trust can be done while you are living, or it can be designated to be established in your will after you are deceased.
Because of the complexity and specific rules of a special needs trust, you should have an estate attorney draw this up. We can not only explain the different things a trust can be used to pay for -- as there are items it cannot be used for such as food and shelter --- but we can also ensure that it meets the state and federal standards, and can pass the muster if it is subject to court approval.