Special Needs Trusts

"It takes as much energy to wish as it does to plan."

- E. Roosevelt

Special Needs Trusts

Establishing a secure plan for the care of a disabled loved one after you pass is absolutely essential. Special Needs Trusts provide the extra financial security that is needed without the risk of losing federal benefits. 

When you undertake estate and financial planning, it’s not as simple as being worried about personal assets; you’re concerned about your family and loved ones, and want to make sure that your assets go towards helping them in the best ways possible. You know that you won’t be around forever, and the people who had previously depended on you for care and support will continue to need that support in the future.

However, a seemingly easier tactic of leaving the person a large amount of money can be a very bad idea. A one-time payment can run out more quickly than you anticipated, and once it’s gone, it’s gone. You won’t have the ability to manage the money to make sure that it is spent prudently and carefully.

Furthermore, the disabled person may have been disqualified from other benefits because of the size of that single payment. This would put them in a dire situation -- after the initial amount is gone, they will no longer have either your financial support or other benefits.

This is why establishing a more secure plan for the care of a disabled loved one after you pass is crucial. With careful financial planning, you can continue to support disabled loved ones after you pass.

When to Create a Special Needs Trust

A special needs trust shares many basic features with other kinds of trusts. The trust creator chooses property to deposit into the trust, then names the person who will manage the trust (the trustee) as well as the person or persons who will receive payments from the trust (the beneficiaries).

The trustee oversees the trust, helping it to maintain its size or grow, and distributing payments depending on the beneficiary’s needs as well as per your detailed instructions. The trustee’s careful administration of the trust is part of what makes a trust a more desirable option than a single lump sum payment directed by a will.

What sets special needs trusts apart from other kinds of trusts is their purpose. They can also be called supplemental need trusts or disability trusts because they help provide for disabled beneficiaries. These beneficiaries don’t always have the ability to manage their own finances, and they may require additional support to their other government benefits or financial resources.

If you are worried about providing for a disabled loved one after you pass, a supplemental needs trust is a good idea to implement as part of your estate plan. Rather than leaving a large one-time payment through a will that cannot be carefully managed and may disqualify a disabled person from other government benefits, utilizing a disability trust is the preferable long-term planning technique.

How to Begin Special Needs Trust Planning

At Perkins & Zayed, we can help you create a solid and effective special needs trust as part of your financial planning. To be properly constructed, the language in a special needs trust must convey the following:

  • The trust is irrevocable and cannot be changed or modified after it goes into effect

  • The disabled beneficiary is unable to make any demands on how funds are distributed

  • The trustee is given full discretion over the trust assets and has the ability to make decisions for the benefit of the beneficiary

  • The trust is not intended to be a basic support, but exists solely to provide supplemental benefits in addition to other financial resources

  • The trust does not jeopardize the eligibility for public government assistance

This list is only the start of setting up a supplemental needs trust or disability trust. It’s absolutely essential that a special needs trust is set up correctly. This prevents the possibility of a beneficiary being disqualified from federal long-term assistance and the trustee from mishandling the distributions.

Don’t try to go this process alone and risk negative repercussions. Contact us to learn more about these specific trusts. Reach out today for a complimentary consult at 630-665-2300.