A Supplemental Needs Trust enables a person with a disability, or chronic illness, to have an unlimited amount of assets held in Trust for their benefit. In a properly-drafted Special Needs Trust, those assets are not considered countable assets for purposes of qualification for certain governmental benefits. This may include (SSI), Medicaid, vocational rehabilitation, subsidized housing and other benefits.
Special Needs Trusts have their own Federal ID number (EIN), therefore the trust will not be registered under either the Grantor or Beneficiaries Social Security Number.
The Trust must be irrevocable. If the Trust may have a provision for the termination of the trust, dissolution of the trust under certain circumstances and specific directions for amending the trust.
An additional benefit to the Special Needs Trust is that it will protect the assets in the trust from Judgements. This will help protect the assets from creditors.
A Special Needs Trust is a great way for parents to insure that their child will receive their assets when they pass and that the assets will be used to help pay for beneficiaries survival. The Trust must be set up before the Beneficiary reaches the age of 65 years.
Some people may be tempted to just leave the money to a sibling of the person with the disability, but there is a risk in doing this. The risk is that if the sibling is sued and there is a judgment against this party the person with the judgment can go after the assets.
Often Trusts are not setup when they receive assets such as lump sum government benefit payments. These monies may be received as “back pay” for SSI or SSDI. The problem is that these payments become income to the beneficiary when it is received, so if there is not a trust set up it will become income to the beneficiary. This sudden influx of money can disqualify a person from the benefits they were just approved for.
A Special Needs Trust can help provide the peace of mind that you and your child needs. It can insure that they will have the money they need available to them without loosing any of their government benefits.
As the beneficiaries parent you cannot be the trustee. In order to insure that the trust can be administered after you pass a third party will need to serve as the Trustee. The Trustee can be a family member or a institution that provides these types of services.