Monday, May 20, 2013

Special Needs Trust Part 1: Planning Ahead

The following article is written in two parts – the first focused on the properties of a Special Needs Trust. Catch our blog next week for Part 2: Trustee Appointment.

Did you know that the largest minority group in the United States is people with disabilities?

For families affected by disability, especially physical and developmental disabilities, the care needed can be daunting – physically, emotionally and financially. While many government programs exist to aid these individuals, they still fall short in most cases and, in the current economic environment, face budget cuts.

The simple truth is that it is vitally important for these families to have the proper financial plan and legal documents in place. One of the cornerstones of such a plan can be the Special Needs Trust.

Special Needs Trusts, sometimes called Supplemental Needs Trusts, have existed for years, but in 1993 Congress specifically authorized the use of Special Needs Trusts for the benefit of individuals under the age of 65 and who are disabled according to Social Security standards.

In other words, assets in a Special Needs Trust are not countable when it comes to qualifying for government assistance. However, the Trust is designed to provide, “supplemental and extra care over and above that which the government provides.” As a result, how assets held in trust are used must be carefully managed in order not to jeopardize available government assistance. It is often noted that the Trust should operate on a sliding scale – providing benefits to whatever extent they are not covered by government aid. If not properly done, some or all government benefits could be forfeited.

Another advantage of the Special Needs Trust is that assets are also not subject to creditors or judgment in a lawsuit. The assets remain protected both for and from the individual with disabilities. As added protection, this can dispel the notion that the individual with disabilities is an easy target with “deep pockets” in the form of the Trust.

For these and other reasons, then, the Special Needs Trust has become the estate planning tool of choice for families of an individual with disabilities. However, it is critical that the Trust be established correctly. It is imperative that not only is an attorney consulted, but that it is an attorney who is very familiar with – and perhaps even specializes in – Special Needs Trusts.

Planning ahead for the future can be overwhelming, but taking the right steps of preparation will save you time, money and stress. If we at Kemp and Associates can help in any way, please feel free to
contact us directly.


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