A Special Needs Trust can supplement support of a special needs beneficiary while allowing the beneficiary to maintain his or her governmental benefits, including Supplemental Security Income (SSI), Social Security and Medicaid. With medical advancements, people with disabilities are living longer and public benefits are often necessary (especially for health insurance), yet there is no guarantee that public benefits will provide adequate resources over the disabled person’s lifetime. Nor can you be sure that existing public agencies will continue to provide acceptable services and advocacy over a disabled person’s lifetime.

If the special needs trust is established by you or someone other than the disabled person and the disabled person does not have the legal right to demand trust assets, in many states, the trust is not considered a “countable resource” for purposes of government benefits. Therefore, the special needs trust beneficiary can continue to receive benefits even though he or she is a trust beneficiary. The trust will give the trustee the discretion to make distributions to the beneficiary to the extent possible without reducing benefits, and trust assets are available if the beneficiary no longer qualifies for governmental assistance or that assistance is no longer available.

If the trust is established on the beneficiary’s behalf based on a court order, for example as part of a personal injury settlement, the trust will also not impact the beneficiary’s eligibility. However, it may need to include a “payback” provision that reimburses the state for its assistance before trust assets pass to the trust’s “other” beneficiaries upon the death of the special needs beneficiary.

Common savings vehicles for children, like Uniform Transfer to Minor Acts (UTMA) accounts, typical trusts, or designating a retirement plan, insurance policy or annuity directly to an SSI or Medicaid recipient will cause a reduction or elimination of public benefits. Recognizing this, some parents make the difficult decision to disinherit their special needs children, but this severe action is unnecessary with proper estate planning by creating a special needs trust.

About Brenda Geiger, J.D.

Brenda is a Trusts & Estates Attorney with her primary office located in Carlsbad, California (she also has satellite offices in Costa Mesa and La Jolla). Brenda graduated from the University of San Diego School of Law where she served as an Editor on the San Diego International Law Journal and published a scholarly article in the Law Journal. Brenda is also a published author of many articles and 3 books on estate planning. The most recent book was released in June of 2009 entitled “Safeguarding the Nest” available at www.SafeguardTheNest.com. Her passion is helping families protect their children and keeping families out of the court process at incapacity and death. On a more personal note, Brenda is married to Len, the CEO of the San Diego based web hosting company WebIntellects, Inc. and they have two small children, Lenny and Taylor. They also have two dogs, Starsky and Semper (their lovable German Shepherds)

For more free articles and reports, go to www.SmartMomLawyer.com. To request a special planning meeting with Brenda, call (760) 448-2220 or email us at info@SmartMomLawyer.com