Special Needs Planning
Planning for a person with special needs involves planning so that the special needs individual does not become ineligible for essential government benefits. Special needs planning is not “poverty planning.” It is unnecessary to disinherit a special needs person, but planning that is not designed with the person’s special needs in mind will probably render the person ineligible for essential government benefits.
A Special Needs Trust is a Trust designed to receive and manage assets for a person with a disability, while maintaining eligibility for governmental benefits. The Trustee will have full control and discretion over distributions. The distributions from the Trust are to “supplement” government benefits and provide for “special needs” that enhance quality of life. “Special needs” can include medical and dental expenses, annual check-ups, desirable equipment (such as a specially equipped van), training and education, insurance, transportation, and essential dietary needs. It may also include spending money, electronic equipment, computers, vacations, movies, payments for a companion, and other quality-of-life enhancing expenses.
If the trust is established on the beneficiary’s behalf pursuant to court order, for example as part of a personal injury settlement, the trust will not impact the beneficiary’s eligibility for governmental benefits, but it may need to include a ‘payback’ provision that reimburses the state for its assistance before trust assets pass to the trust’s other beneficiaries.
When planning for a person with special needs, it is critical that sufficient assets be available throughout his/her lifetime. A key benefit of a Special Needs Trust is that family and friends can make gifts to the Trust. These family members and friends can name the Special Needs Trust as the beneficiary of their own assets in their Trust or Will, and they can also name the Special Needs Trust as a beneficiary of life insurance or retirement benefits.
Proper funding, implementation and periodic reviews of the Special Needs Trust are critical because it may have to last a lifetime and often cannot be replaced. Because none of us knows when we may die or become incapacitated, it is important to plan for a beneficiary with special needs now. Unlike other beneficiaries, a child with special needs may never be able to compensate for a failure to plan.
Common savings vehicles for children, like Uniform Transfer to Minor Acts (UTMA) accounts, typical trusts, or designating a retirement plan, insurance policy or annuity directly to an SSI or Medicaid recipient will cause a reduction or elimination of public assistance and government benefits. Recognizing this, some parents make the difficult decision to disinherit their special needs children, but this severe action is unnecessary. There are ways to provide for loved ones with disabilities without disinheriting them.
At Wirowek Law Group, P.C., we are prepared to work with you and your team of advisors to establish a plan that will be designed to provide for the special needs beneficiary without rendering him or her ineligible for essential government assistance and that will enhance his or her quality of life.
Copyright Wirowek Law Group, P.C.
Phone: 209-572-2124 | Fax: 209-569-5075
P.O. Box 515 Brisbane, CA 94005