Special Needs Trusts
If your child was born with a serious birth injury, they'll most likely need lifelong medical care, and if your child outlives you, you want to make sure that your child's needs and well-being are taken care of when you're gone.
Many families choose to create a special needs trust for their injured child. Creating a special needs trust creates a mechanism to provide for a child with a birth injury that includes:
Choosing a trustee to manage the trust.
According to the American Bar Association, one of the most important decisions you'll make is picking the person, people or institution that will be in charge of your assets after you're gone. That means the trustee of the special needs trust that you set up. You can choose more than one person to fulfill these duties as co-trustees. This is a way to ensure that at least one person has legal or financial expertise and one is close to the family. If you choose this course, be sure to pick people who can work together. You must also choose a successor in case your first choice dies or is unable to serve.
Sometimes a professional trustee is recommended due to the labor-intensive nature of special needs trust administration. In that case, the trustee must be capable of recognizing and discharging regular fiduciary duties, in addition to undertaking an appropriate ongoing analysis of relevant means-tested government programs and the impact of trust distributions.
Designing an organized way to pay for your child's lifelong needs.
Every birth injury is different, and every injury requires a different approach to take care of the child's long-term needs, such as medical bills, future surgical procedures, in-home care and other related expenses. These bills can add up to hundreds of thousands or even millions of dollars. A life care plan is a detailed accounting of all of these costs, and a special needs trust can be used to fund the plan.
Setting up automatic payments from the trust for certain routine expenses.
According to the American Bar Association, permissible routine expenditures could include housekeeping, grooming, meal preparation, internet service, fitness club membership, attorneys, accountants, claims processors, advocates, coaches, classes, dry cleaning and laundry services, auto services, home security, landscaping, music lessons, medications veterinary services, telephone service and cable television.
Allocating money to cover expenses not covered by government benefits.
The beneficiary of a special needs trust may rely on local, state or federal governments or agencies for basic support and maintenance. A supplemental care special needs trust provides for needs of the beneficiary that are not fully funded by government programs. If drafted properly, a supplemental care special needs trust does not replace means-tested government benefits for which the beneficiary may be eligible as a result of his or her disabilities, according to the American Bar Association.
Confirming expenses for calculating Supplemental Security Income benefits.
The Social Security Administration refers to special needs trusts as Medicaid trusts because 2018 legislation set forth exceptions to the general rule of counting trusts as income and resources for the purposes of Medicaid eligibility. While these exceptions are also Supplemental Security Income exceptions, they refer to them as Medicaid trust exceptions to distinguish them from other exceptions to counting trusts provided in the SSI program (such as undue hardship) and because the term has become a term of common usage.
These are some of the benefits for families who choose to create a special needs trust for their child. Ultimately, it's up to you and your legal counsel if a special needs trust is right for you. That's why we recommend scheduling a free legal consultation with an attorney in your area.