How Do Special Needs Trusts Work?

The most common question faced by special needs parents and caregivers is, ‘What will happen to them, if I am not here?’

This is only one of a million questions that parents of children with special needs or caregivers worry about every day, but it is always on their minds. Despite this worry, 72% of parents and caregivers have not yet named a trustee for their child or have not formally planned for their future care or guardianship. This is something that should be at the top of their to-do lists, says kake.com in the article “Special Needs Trusts are Always Available to those Who Need them.”

A Special Needs Trust, also known as an SNT, has many benefits for parents and caregivers, including peace of mind. Here’s what you need to know:

A special needs trust is a way to set aside money for a special needs child or individual. In 2016, President Obama signed the 21st Century Cures Act. This new law made a number of changes to existing laws about SNTs. It gave children with special needs and adults the ability to get funding through a trust. The assets are available to them, in addition to any existing government-funded programs they were receiving. With a SNT, the individual can receive their public help and the extra money also. That includes an inheritance or life insurance payment, after their parents or caregivers pass away.

There are a number of different types of SNTs, so it’s important to talk with an experienced elder lawyer who is familiar with the SNT laws and applicable law in your state. The most commonly used SNTs are called ‘self-settled’ trusts and ‘pooled’ trusts.

For a self-settled trust, the individual is allowed to create the trust by themselves, from their own money. If the individual is a minor, a parent or guardian must establish the trust and determine when the individual may take funds from it. Those who are not minors, may create this type of trust without the approval of the court.

A pooled trust is typically created when the individual is older than 65 and establishes the trust on their own.

A trustee must be named for the trust. This should be someone in whom the parents have great faith and confidence.

The biggest benefit for parents or caregivers is the peace of mind of knowing that the disabled individual will have access to additional funds, if they need them. Speak with an estate planning or elder law attorney who can help create the type of trust appropriate for your situation.

Reference: kake.com (Nov. 16, 2019) “Special Needs Trusts are Always Available to those Who Need them”

Suggested Key Terms: Special Needs Trusts, SNT, Caregiver, Trustee, Pooled Trust, Self-Settled Trust

About the author

Bob Brumfield

Attorney Bob Brumfield has been practicing law since 1984 and regularly receives the “Top Lawyers in California” award as well as the “Client Distinction” and “Client Champion” awards from Martindale-Hubbell.

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