What Is The Purpose of a Special Needs Trust?
A special needs trust is often opened up by a person who has a family member with special needs that they want to provide additional support to. Because many people with special needs also qualify for—and rely on—government benefits such as Supplemental Security Income (SSI) and Medicaid, family members cannot give their loved ones cash without jeopardizing their benefit eligibility. Both SSI benefits and Medicaid are income-contingent programs, meaning benefits are only provided to those who make less than a certain amount of money and own few assets.
A special needs trust is a crucial element in both estate planning and special needs planning. Often, while parents are living, they will pay for the expenses of a child with special needs. However, when parents pass away, who will ensure that their child has access to the funds they need to continue with their current standard of living? A special needs trust solves this problem. By setting up a trust, transferring assets into the trust, and naming a trustee, parents (or grandparents) can rest assured that their loved ones will have their needs met while continuing to receive government benefits.
Special needs trusts can pay for many everyday expenses, as well as many other expenses. For example, a trustee can make distributions from a special needs trust for any of the following costs:
- Caregiving costs;
- Necessary services, including a cell phone or internet service; and
- Traveling, including the cost of bringing along a companion.
Special needs trusts cannot pay for expenses that are covered by other forms of benefits. Expenses pertaining to food and shelter are also generally not approved. However, determining whether a distribution is allowed is not always cut-and-dry, and trustees of special needs trusts often require the assistance of an experienced estate planning or special needs planning attorney.
Other Frequently Asked Questions:
- Does Probate Administer All of The Decedent’s Property?
- How Can I Minimize The Taxes For My Estate?
- How Does A Living Trust Apply in Pennsylvania?
- How Does the Medicaid Look-Back Period Work?
- How Should I Plan For My Minor Children?
- Should You Discuss Your Estate Plans With Your Adult Children?
- What Are the Most Common Estate Planning Mistakes?
- What Is A Special Needs Trust?
- What Is A Spendthrift Trust?
- What Is A Will Contest?
- What Is Probate in Pennsylvania?
- What Is The Difference Between Medicare and Medicaid?
- What Is The Purpose of a Special Needs Trust?
- What Is The Simplified Probate Procedure For Small Estates in Pennsylvania?
- What Seniors Need to Know About Strategic Gifting
- What Taxes Will Apply to My Estate After My Death?