Introduction
A special needs trust can ensure that your family member with a physical or mental disability is well cared for, even after your death. A special needs trust attorney can help you to provide for your child everything they need.
How Does a Special Needs Trust Work?
A special needs trust is specifically designed to protect someone with a physical or mental disability and to help them retain their access to government benefits such as Supplemental Security Income or SSI and Medicaid.
If your child inherits money from you or has their own estate, they will likely be removed from government benefits as they’ll be considered to have enough money. A special needs trust offers opportunities for your child to retain their government benefits.
A special needs trust sets up a trustee who will manage the funds and can set down specific instructions for how the trust funds will be used over time.
6 Benefits That A Special Needs Trust Attorney Can Provide for Your Child
A special needs trust should be created and written by a special needs trust attorney to ensure that the document is legally binding and covers all of the needs of your child. A special needs trust attorney can provide multiple benefits to your child.
1. You Can Use the Funds to Pay for Education, Medical, and Dental Services
A special needs trust is money specifically set aside for someone with a disability. That money is limited to being used for the needs of that individual and as set out by the special needs trust attorney.
In general, special needs trust funds can be used for anything the beneficiary, the person with a disability, needs. This usually includes education, medical, and dental services, among other routine care costs and needs.
2. You Can Also Use the Funds to Pay Anything Not Covered by Government (With Some Limitations)
In addition to paying for the beneficiary’s education, medical, and dental needs, the special needs trust can set aside funds to be used to pay for anything that ends up not being covered by the government.
However, there are some limitations on how the special needs trust funds can be used. A special needs trust attorney will be able to inform you of any specifics you need to avoid paying for, but in general, you cannot use trust funds to pay for, housing or food for the beneficiary.
A special needs trust is typically created to provide for someone with special needs who also received government benefits. Those government benefits are revoked if the beneficiary has a certain level of income. Money paid from the trust for food or housing is considered income for the beneficiary and therefore would disqualify them from receiving government benefits.
Money or cash given directly to the beneficiary, no matter how it is then used, is also considered income and can disqualify someone from receiving government benefits.
3. With a Special Needs Trust, the Money Will be Safe With Someone You Trust
If you pass your money along to your special needs child in a traditional will or give the money to another child with instructions on how to care for your special needs child, you have no guarantee that they will be cared for in the way you direct.
A special needs trust provides protection for your special needs child and ensures that they are taken care of how you want, even after you’re gone.
4. Your Child With Special Needs Will Still Be Eligible For SSI and Medicaid
One of the most important benefits of a special needs trust is that the funds can be used to care for a special needs child but don’t count as income. If the funds counted as income, your child would probably lose access to government benefits such as SSI and Medicaid.
A special needs trust allows you to use the funds for a special needs child without losing access to SSI, Medicaid, and other government benefits.
5. A Special Needs Trust Attorney Can Help You Update The Document
A special needs trust is a complicated document covering how trust funds are used, by whom, and when. The legal nuances can be confusing to someone who isn’t familiar with the details of a special needs trust. A special needs trust attorney can help you to make sure your special needs trust stays up to date and is updated regularly as the needs of your special needs child change.
6. Planning Ahead With an Experienced Lawyer is The Key to A Successful Special Needs Trust
You don’t want to leave the creation of special needs trust to the last minute or to when you actually need it.
Create your special needs trust early so that you have time to make sure everything is correct and is in place prior to when it is necessary. An experienced special needs trust lawyer can help you make sure you’re planning ahead.
Common Questions About Special Needs Trust
Putting together a special needs trust requires examining the situation from all angles. These are some of the common questions I hear from families who are considering a special needs trust.
Are Special Needs Trusts Irrevocable?
Yes. To be most effective, your special needs trust should be irrevocable. This means that no one can dissolve the special needs trust once it has been created.
What Can Be Paid Out of a Special Needs Trust?
A special needs trust can pay for anything that a beneficiary needs, except for food and housing. If the special needs trust provides the beneficiary with cash or pays for food or housing, those payments will be considered income to the beneficiary. If the beneficiary has enough income, they will lose their government benefits such as SSI and Medicaid.
How Are Special Needs Trusts Taxed?
If the special needs trust has any income, especially if that income is higher than $600, you will need to report the income amount and pay tax upon that income. To pay tax for a special needs trust, the trustee will file an original tax return for the trust. The amount of tax paid will depend upon which type of trust you have formed.
What Happens to a Special Needs Trust at Death
A special needs trust is designed to continue without delay even after the death of the grantor or the person who funded the trust. After the death of the beneficiary or special needs child, the special needs trust is dissolved and the leftover funds are dispersed as set out in the provisions of the special needs trust.
How to Start a Special Needs Trust for Your Child
Setting up a special needs trust for your child might seem overwhelming or confusing, but with the help of a special needs attorney, you might be surprised at just how easy it is.
1. Find a Reliable Special Needs Trust Lawyer Near You
The most important step in creating a special needs trust is to hire a reliable special needs lawyer. If you’re in the area, you can hire the best special needs trust attorney in San Diego at the KAM Law Firm. Though there is a cost to hiring a lawyer, the special needs trust attorney fees are worth the cost when you know that your loved one will be properly taken care of in all situations.
2. Decide Who Will Be The Trustee
The second step in creating a special needs trust is deciding who will be the trustee. The trustee is the person who will be in charge of care for the special needs beneficiary and for disbursing funds as necessary. It’s important that the trustee be someone you trust.
3. Identify The Best Type of Special Needs Trust For Your Child
There is more than one type of special needs trust. You need to choose whether a third-party special needs trust, first-party special needs trust, or pooled special needs trust is right for your situation. A special needs trust attorney can help you make that decision.
4. Provide All The Documents to the Special Needs Trust Attorney
The special needs trust attorney will need certain documentation about the lifestyle and medical condition of the special needs beneficiary to help them create the special needs trust.
If you’re considering a special needs trust for your family member, you can get a free consultation with a reliable law firm and a special needs trust attorney at the KAM Law Firm.
