Many families have loved ones who have special needs: Autism, Downs Syndrome, Bipolar disorder, Schizophrenia or some other type of debilitating physical, mental, or developmental disability. As much as we love our family members, sometimes it can be emotionally very challenging to care for the ones in these particular circumstances. For some families it makes more sense to put money into a trust and have a third-party private fiduciary appointed as a trustee to manage the trust and finances for that particular family member.
For others, regardless of the emotional circumstances, there is a legal basis for the creation of what is called a Special Needs Trust (“SNTs”). For instance, when someone is receiving social security payments, food stamps, and other government funding due to a disability, it is important for family contributions to be placed in a trust so as not to invalidate those benefits. If a family member wishes to contribute to that individual’s daily life expenses, then they cannot just transfer money to their account because that money would be considered income.
Once those resources are classified as income, their benefits would be invalidated. The SNT was designed to isolate the family contributions from being considered as “income” and allow the benefits to continue being received without disruption.
There are many specific eccentricities with regard to how a SNT functions and what expenditures are validated that again will not affect the received benefits. Only a well-versed attorney understands these eccentricities, so it is crucial to work with an experienced attorney in the drafting and administration of a SNT.
Drafting a Special Needs Trusts
A carefully drafted SNT can be a flexible and effective way of providing for the immediate and future needs of disabled persons. The SNT can be customized to address the individual needs of the disabled person.
Like any other trust, an SNT is a trust (or fund made up of real estate, money or other tangible items) that is set up for the benefit of another (the “beneficiary”). The SNT is managed by a “trustee” for the benefit of the beneficiary; in this case, the special needs person. As indicated above, the trustee is typically a private fiduciary, but it can also be a friend or family member, if you so choose. The trust lasts as long as it is needed. Generally, that is until the beneficiary’s death or until the funds are expunged.
Many times people will simply leave money to their special needs family member in their will. However, this isn’t always the best approach as it can cause the disabled person to become ineligible for certain government assistance programs, as indicated above, such as Social Security Income, subsidized housing, or Medicaid. That is why it is important to speak to experienced trusts and estates counsel to ensure that your SNT is well-drafted and your loved one will not lose any critical benefits that he or she may be receiving. We have offices in Sedona, Arizona and we offer free consultations.
There are many things to consider when deciding whether or not to set up a Special Needs Trust for your loved one.
We are experienced trusts and estates attorneys. We offer free consultations, we serve all of Arizona, and we can help you provide and plan for your loved ones. Call us at 928-282-1483 or contact us here.