If you are the parent of a special needs child, you may wonder how you can ensure your child remains eligible for government programs while still benefiting from their inheritance once they are an adult. There are many ways to accomplish this, but perhaps the best method is through a special needs trust. A special needs trust effectively preserves the beneficiary’s eligibility for Medicaid and SSI (needs-based government benefits). In addition, since the special needs beneficiary does not own the assets in the trust, they remain eligible for government programs with an asset limit.
The beneficiary can receive supplements to government benefits without replacing them from the special needs trust. These supplements can include dental or medical expenses not covered by Medicare or Medicaid, companions, and more. To ensure your special needs child or grandchild is cared for without sacrificing eligibility for specific government programs, contact attorneys for special needs trusts in San Jose from Steburg Law Firm.
What Can Happen if You Die Without a Special Needs Trust for Your Child?
If you have a special needs child, you have probably thought—on more than one occasion—about what would happen to your special needs child or adult if you unexpectedly die. If you have an estate plan that does not include a special needs trust, your child could be denied necessary services from Medicaid, Medicare, or SSI. The level of assets you leave the child is unlikely to provide for all their needs for the remainder of their life. This places your child in a very precarious position. They could be taken care of by individuals you would not have chosen to care for them or do without necessary services.
What Are the Benefits of a Special Needs Trust?
There are many benefits to having a special needs trust. Such a trust can help pay for necessary services for a special needs child or adult. The trust allows the beneficiary to remain eligible for government assistance, while the money in the special needs trust helps with “extras.” Additionally, the funds in a special needs trust are tax-deductible, never available to creditors or to pay a judgment.
What Are the Different Types of Special Needs Trusts?
Establishing a special needs trust can be manageable. The steps are relatively straightforward, differing only according to the type of special needs trust chosen.
- Third-Party Special Needs Trust—The first type of special needs trust is the Third-Party Special Needs Trust. Family members, particularly parents or grandparents, are the most likely to establish this type of special needs trust. Under some circumstances, a third party may establish the special needs trust. Such a trust cannot be set up using beneficiary assets. Establishing a Third-Party Special Needs Trust requires a family member to sign the trust document and transfer the assets to the Trustee.
- Non-Pooled Special Needs Trust—This type of trust must be established using the beneficiary’s assets that may have come in the form of an inheritance or a settlement award. These trusts have very stringent legal requirements. At one time, the trust beneficiary could not sign a special needs trust document, depending on their legal guardian, parent, or grandparent. This type of trust could also be court-created, yet the beneficiary was still not permitted to sign the trust document. In December 2016, the 21st Century Cure Act was signed into law, adding the word “individual” to those allowed to set up a special needs trust.
- Pooled Special Needs Trust—This type of trust is also funded with assets belonging to the beneficiary. A non-profit association administers this type of special needs trust. First, a Master Trust is established, then a second trust document—a Joinder Agreement—creates the Trust account for the beneficiary’s benefit. Individual beneficiaries create accounts within a more considerable trust, then each individual’s funds are invested, along with all other funds. Pooled Trusts can pool assets for investment and management purposes, but separate accounts must be maintained for each beneficiary.
Special needs trusts can be complex and confusing. An experienced Steburg Law Firm attorney can help ensure you choose the right type of special needs trust for your situation and that it is appropriately prepared and executed.
Is There a Downside to a Special Needs Trust?
There are very few downsides to implementing a special needs trust, although the fees charged annually to maintain the trust and the expense of setting up the trust can be prohibitive in some cases. The special needs child or adult has virtually no control over how the trust funds are disbursed. In other words, if the special needs individual wanted to use the funds to pay for assistance with meals and cleaning, but the trustee didn’t find those things necessary, they would likely not be paid for out of the trust. The trustee has complete control of the funds in the trust, placing the beneficiary in the position of asking the trustee for anything they need. When the special needs trust beneficiary dies, Medicaid will demand reimbursement for any money used for the beneficiary, which can often zero out the trust account.
How Can You Select the Best Attorneys for Special Needs Trusts in San Jose?
If you think a special needs trust is right for your family, consult a knowledgeable attorney before taking legal action. These documents are often irrevocable, making them extremely difficult to revise. In addition, your lawyer should understand the nuances of special needs law, preventing mistakes that may cause disastrous results when it comes to estate planning.
When choosing an attorney to help with your special needs trust, you need someone who focuses on trusts and wills. Many law firms offer various services but are not deeply experienced with any one type of law. It would be best to have someone who deals with trusts regularly so they have the depth of knowledge necessary to handle such a complex matter.
At Steburg Law Firm, we will work to ensure your child’s needs are met now and in the future. Our careful planning strategies guarantee an effective outcome for your goals as we focus on building strong client relationships. When you choose Steburg Law Firm to prepare your special needs trust, you can rest assured that we will listen to you, answer your questions, and ensure we understand the needs of your special needs child before we begin making recommendations.
How the Steburg Law Firm Will Protect Your Family and Preserve Your Legacy
Choosing attorneys for special needs trusts in San Jose from Steburg Law Firm will provide you with access to all the tools you need to secure the future of your loved ones. We have extensive experience preserving our clients’ legacies and a high level of knowledge regarding every aspect of an estate plan. Our willingness to always put your needs first makes our firm stand out from others. We are ready to meet and discuss your needs—contact Steburg Law Firm today.
