Important information about special needs trusts
Parents of special needs children have a wide range of reasons for wanting to set up a trust even though their assets fall well below the exemption limit for the estate tax. These reasons include guardianship and the questionable availability of public resources. Complications can also arise when it comes to the income cap for recipients of Medicaid and Security Supplemental Income. Thankfully, there is a special type of trust for this situation: the Special Needs Trust (SNT).
An SNT provides an ongoing financial resource for special needs children without the worry of ruining eligibility for government assistance. These trusts can fund a variety of expenses, including medical care, entertainment, food, housing, pet care, and other costs related to quality of life. The money within these trusts is shielded away from landlords, credit card companies, and other types of lenders.
There are several iterations of the SNT available for families. One option is the self-settled or first-party trust which is a common choice when the disabled person owns property before the onset of their disability, gets an inheritance, or receives a court-mandated settlement. Another option is accounts enabled by the Achieving a Better Life Experience Act of 2014. ABLE accounts are state-managed trusts that are funded by after-tax dollars.
Mothers, fathers, or other people with a vested interest in a special needs person might benefit from consulting with an estate planning attorney if they want to set up a SNT. A lawyer may be able to work closely with a family to figure out their goals and the appropriate legal tools to accomplish them. An attorney should be up to date on all the available trusts for special needs persons and their unique advantages and disadvantages.