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A Special Needs Trust Webinar can provide the guidance families need to secure their loved one’s future without jeopardizing essential benefits. Government assistance programs like Medicaid and SSI come with strict financial limits, making it challenging to provide extra support without legal planning. A special needs trust helps families set aside funds for medical care, housing, and quality-of-life expenses while keeping benefits intact. Without the right plan, a well-intended inheritance or financial gift could cause more harm than good. Learning how these trusts work and how to structure them correctly ensures long-term security for individuals with disabilities.
Understanding Special Needs Trusts and Their Importance
Welcome to the Fireside Chat
Good morning, everyone. My name is Megone Trewick. Thank you for joining me for our first Bryan Fagan Fireside Chat. I’m excited to talk about a topic that can make a real difference for families: special needs trusts. These chats will take place every fourth Wednesday at 10:30 AM, so mark your calendars.
During these sessions, you can ask questions in the chat or comment section, and I will answer them live. Please keep your questions general to protect your privacy. If you need a detailed consultation, click the link provided to schedule a free meeting with one of our legal ambassadors.
Who We Are
You may know the Law Office of Bryan Fagan for our work in family law, but we also provide estate planning, wills, probate, and guardianship services. I’m the lead estate planning attorney, and if I’m not available for a session, another experienced attorney from our firm will be here to guide you.
Now, let’s talk about special needs trusts and why they matter.
What Is a Special Needs Trust?
A special needs trust provides financial support for individuals with disabilities without affecting their eligibility for government benefits. These trusts allow families to set aside money for a loved one while ensuring they still receive assistance like Medicaid or Supplemental Security Income (SSI).
To qualify for a special needs trust, the beneficiary must have a diagnosed disability. This includes conditions like Down syndrome or severe autism, where lifelong assistance may be required.
How a Special Needs Trust Works
This type of trust is usually created by a parent, grandparent, or another loved one, but in some cases, the individual with special needs can set it up themselves. If someone foresees the need for future care—such as in cases of early dementia—they can place their assets into an irrevocable trust.
Once assets enter the trust, they no longer count as personal property, allowing the individual to qualify for benefits while still receiving financial support. The trustee, chosen by the person establishing the trust, manages these funds.
Benefits of a Special Needs Trust
Creating a special needs trust ensures that your loved one has a high quality of life even if you’re no longer around.
Supplementing Government Benefits
A special needs trust allows families to provide additional support without affecting Medicaid or SSI eligibility. Funds from the trust can cover costs like:
- Private therapy or specialized treatments
- Home modifications for accessibility
- Transportation services
- Educational programs
- Recreational activities and hobbies
These funds cannot replace government-provided assistance but can enhance the recipient’s lifestyle.
Protecting Assets for the Future
Unlike other forms of inheritance, money left in a special needs trust cannot be misused or counted as income, which would disqualify the individual from benefits.
Leaving money directly to a person with disabilities could create problems, as many government programs have strict income limits. A sudden financial windfall might force them to spend down their assets before reapplying for aid. A special needs trust prevents this issue by keeping funds separate from personal assets.
Types of Special Needs Trusts
Third-Party Special Needs Trust
A third-party trust is set up by someone other than the person with disabilities. Parents, grandparents, or other family members can create this trust, naming a trustee to manage the funds.
This is a great option for those who want to ensure long-term financial security for their loved one. It prevents issues that come with directly gifting money and provides clear guidelines for how the funds should be used.
Self-Funded Special Needs Trust
In some cases, a person with special needs can create their own trust if they have the legal capacity to do so. If they receive a financial settlement or inheritance, placing those funds in a self-funded trust allows them to keep their benefits while using the money for additional support.
How to Set Up a Special Needs Trust
Choose a Trustee
The trustee plays a key role in managing the trust and distributing funds. Many people believe only financial institutions can serve as trustees, but that’s not true. Parents or other family members can manage the trust if they choose. If necessary, a professional trustee can step in to oversee financial decisions.
Fund the Trust
Assets for the trust can come from different sources, including:
- Personal savings
- Property or investments
- Life insurance policies
A life insurance policy can be an excellent way to fund a special needs trust. The policyholder names the trust as the beneficiary, ensuring that funds will be available when needed.
Draft the Trust with Proper Legal Guidance
A well-written trust document outlines how funds should be used, who will manage them, and what happens when the beneficiary passes away. Many generic trust templates found online do not include the specific language needed for a legally sound special needs trust. It’s critical to work with an experienced estate planning attorney to avoid future legal and financial complications.
Special Needs Trusts and Divorce
Divorcing parents with a child who has special needs should consider setting up a trust during the legal process.
Child Support and Special Needs Trusts
When a child with disabilities turns 18, child support payments can affect their eligibility for government benefits. One solution is to direct these payments into a special needs trust instead of providing them directly to the child. This keeps the support available while preserving eligibility for assistance programs.
Parents can negotiate this arrangement during mediation and include it in the final divorce decree. The trust ensures that support continues beyond age 18 without disqualifying the child from aid.
Special Needs Trust vs. ABLE Accounts
ABLE accounts offer another way to set aside funds for a person with disabilities. Unlike a trust, an ABLE account gives the beneficiary more control over their money. They can use it for everyday expenses like:
- Rent or mortgage payments
- Utility bills
- Groceries
- Transportation
ABLE accounts work well alongside a special needs trust, allowing individuals to manage smaller expenses independently while keeping long-term assets protected.
Secure Your Loved One’s Future
A special needs trust is one of the best ways to provide long-term security for a family member with disabilities. Whether you want to create a trust now or include it in your estate plan, working with an attorney helps you avoid mistakes that could impact benefits and financial stability.
If you have questions, schedule a free consultation with the Law Office of Bryan Fagan. Our estate planning team will guide you through the process and create a trust that fits your family’s needs.
Join us every fourth Wednesday at 10:30 AM for more discussions on legal topics that matter to you. Ask questions, get advice, and learn how to protect your family’s future.
