Trust Options and Protections for Loved Ones with Disabilities
For families with a member who has special needs, estate planning takes on added importance. It’s essential to establish protections that preserve their access to support while safeguarding their financial future. Special needs trusts and other planning tools can help ensure that your loved one’s needs are met without compromising essential benefits.
1. The Importance of a Special Needs Trust (SNT)
A Special Needs Trust (SNT) allows families to set aside funds for a loved one with a disability without affecting eligibility for government benefits like Supplemental Security Income (SSI) or Medicaid. These trusts are specifically structured to cover supplemental expenses, such as medical treatments, education, or recreational activities, while keeping public assistance intact.
2. Types of Special Needs Trusts
- First-Party SNT: This trust is funded by the assets of the person with special needs (often from a settlement or inheritance). It is subject to Medicaid payback rules, meaning any remaining funds in the trust may be claimed by Medicaid after the beneficiary’s death.
- Third-Party SNT: Funded by family members, this trust is not subject to Medicaid payback, allowing any remaining assets to pass to other family members upon the beneficiary’s death. It’s a preferred option for families looking to provide lifetime support.
- Pooled Trust: Managed by nonprofit organizations, pooled trusts are an alternative that combines resources for individuals with disabilities. Each person has a separate account, but the funds are pooled for investment purposes. Pooled trusts may be a cost-effective option for families with fewer assets.
3. Setting Up a Letter of Intent
A Letter of Intent is a valuable addition to a special needs estate plan. While it isn’t legally binding, this document provides detailed information about your loved one’s preferences, daily routines, medical needs, and more. It serves as a guide for future caregivers, helping ensure continuity of care and supporting a smoother transition if the primary caregiver changes.
4. Designating a Guardian or Conservator
For individuals with severe disabilities, establishing a legal guardian or conservator can provide important protection. A guardian is appointed to make personal, medical, and lifestyle decisions, while a conservator manages financial matters. Carefully selecting these roles ensures your loved one’s well-being and financial stability in the event you’re unable to provide care.
5. ABLE Accounts as a Supplemental Option
An Achieving a Better Life Experience (ABLE) account is a tax-advantaged savings option for individuals with disabilities. ABLE accounts allow up to $15,000 annually to be saved without jeopardizing benefits like SSI and Medicaid. They can be used in tandem with a special needs trust to cover qualified expenses, offering additional flexibility.
6. Ensuring Long-Term Support and Flexibility
Families can structure estate plans with specific language and instructions that maintain adaptability as laws and benefit eligibility requirements evolve. This helps protect assets over the lifetime of the individual with special needs and ensures your plan remains effective across changing circumstances.
Conclusion
Creating an estate plan for a loved one with special needs provides peace of mind, knowing they’ll have the financial support they need without compromising access to essential benefits. At Von Rock Law, we specialize in compassionate estate planning for families, offering solutions tailored to the unique requirements of loved ones with disabilities.
Ready to Begin Planning for Your Loved One’s Future?
Contact us to learn more about special needs trusts and other protections for your family.
