Special needs trusts ensure that beneficiaries with disability continue receiving important government benefits after obtaining an inheritance from their family. Supplemental or special needs trust is designed for providing funds to a disabled person. This is while preserving the person’s eligibility for government benefits.
Reliable attorneys at SBEMP (Slovak, Baron, Empey, Murphy & Pinkney) law firm provides professional legal advice and services to clients in Palm Springs, Palm Desert, Rancho Mirage, Inland Empire, Orange County, Coachella Valley, Costa Mesa, San Diego, New Jersey, New York, and surrounding communities.
What is a Special Needs Trust?
Special needs trust is used for providing benefits to a person with disability or special needs without affecting the federal or state benefits they receive. Typically, the trust is established by a guardian or parent with their child with special needs as the beneficiary. Sibling or another third-party trustee is given the authority to disburse assets on behalf of the beneficiary.
Benefits of a Special Needs Trust
People with disabilities require different kinds of lifelong help. In particular, paying for health insurance can become difficult. Disabled persons find it difficult to hold down a job that offers health insurance. Coverage under Medicaid becomes necessary for covering health expenses. The catch is that Medicaid benefits only those people that have limited resources and income.
If you leave assets your child, they may become ineligible for Medicaid benefits. Special needs trust ensures that assets are not directly left to the child. It allows the child to enjoy the benefits without losing their right to Medicaid. You can choose a trustee to control and disburse the assets as and when required.
How Does a Special Needs Trust Work?
Special needs trust is organized around three roles, like all trusts:
- Grantor or settlor that creates the trust for their wealth
- Beneficiary (or in this case the person with disability)
- Trustee or the person responsible for managing the trust in a way to benefit the beneficiary
A special needs trust can be set up while the parents are still alive. It can come into being on the death of parents. Typically, a close family friend or a sibling is chosen to serve as trustee.
Types of Special Needs Trusts
Third-Party Special Needs Trust is the most common type of special needs trust. This is also known as a Family Trust. The trust is funded by the beneficiary’s family members for ensuring that specific assets are kept aside for paying education, utility bills, entertainment, and other expenses. If the sole goal of setting up this trust is to preserve federal benefits, you should ensure the distributions are not made for medical expenses, shelter, or food.
These items are generally covered by government benefits. Special needs trust can be funded through a life insurance policy. Laws surrounding special needs trusts are significantly complex. The smallest error can cause the beneficiary or person with special needs to lose their federal and state government benefits. Having an attorney with experience can ensure the trust is rock solid.
Motivated and focused lawyers at the SBEMP law firm serve clients from Palm Springs, Palm Desert, Rancho Mirage, Inland Empire, Orange County, Coachella Valley, Costa Mesa, San Diego, New Jersey, New York, and nearby locations for a range of legal practice areas.
Have any legal questions? Contact the Attorneys at SBEMP Law Firm:
For more information or to request a consultation please contact the law offices of SBEMP (Slovak, Baron, Empey, Murphy & Pinkney) by clicking here.
SBEMP LLP is a full service law firm with attorney offices in Palm Springs (Palm Desert, Inland Empire, Rancho Mirage, Indian Wells), CA; Indian Wells, CA; Costa Mesa (Orange County), CA; San Diego, CA; New Jersey, NJ; and New York, NY.
DISCLAIMER: This blog post does not constitute legal advice, and no attorney-client relationship is formed by reading it. This blog post may be considered ATTORNEY ADVERTISING in some states. Prior results do not guarantee a similar outcome. Additional facts or future developments may affect subjects contained within this blog post. Before acting or relying upon any information within this newsletter, seek the advice of an attorney.