Special Needs Trusts: When and How You Should Create One

We all have a family member or friend who is directly or indirectly affected by a sickness, injury, disorder, or other impairment that limits their physical or mental abilities. For them, a Special Needs Trust could provide great benefits. But if they don’t have an advocate who has this option in mind, they will miss out. I don’t want anyone to miss out. That is why I believe everyone should know about Special Needs Trusts.

While a direct gift or inheritance might provide a temporary benefit, it could cause long-term harm, especially if some type of government support is involved. A gift or inheritance to someone receiving government support could disqualify the recipient from the ongoing support they need. Stranded without the support on which they rely, the consequence of the gift or inheritance is likely much worse than the benefit it provided.

Careful use of a Special Needs Trust avoids these consequences. When properly drafted, a Special Needs Trust will provide the benefits you hope for without affecting the government support your loved one needs.

When and How Should You Create A Special Needs Trust?

A trust isn’t a do-it-yourself project. I regularly help people establish Special Needs Trusts for friends and family. I see firsthand how the laws and regulations governing trusts change regularly. They are much too complex to tackle without expertise. For instance, there are several types of Special Needs Trusts. Some work at times while others don’t. Expertise is needed to help you accomplish the most good at the least cost.

Creating a Special Needs Trust in Your Will or Your Trust:

You can create a Special Needs Trust in your Last Will and Testament. Or, if you have a trust as part of your own estate planning, the trust can have a Special Needs Trust built in. When created in either of these ways, the Special Needs Trust will not come into existence until some future event, such as your death. Any asset you directed to the Special Needs Trust through your Will or trust will be used to provide benefits to the Special Needs Trust’s beneficiary.

Using your Will or trust to create a Special Needs Trust makes sense at certain times, such when you don’t think anyone else will create a Special Needs Trust for the beneficiary. And it makes sense when you don’t think anyone else will be interested in making a gift or inheritance to the special needs beneficiary. If these factors don’t apply to your situation, consider a stand-alone Special Needs Trust.

Creating a Stand-Alone Special Needs Trust:

You can create a Special Needs Trust as a stand-alone trust. Stand-alone means it is not part of your Will or part of some other trust, such as the trust you have in your estate planning. The stand-alone Special Needs Trust will come into existence as soon as you create it. Assets can be put in it immediately, and it can begin providing benefits as soon as you want.

Creating a stand-alone Special Needs Trust makes sense at certain times. It makes sense when you want the trust to help the beneficiary before your death or some other future event. And it makes sense when you believe someone else, such as another family member, would like to make a gift or inheritance to the beneficiary. With the stand-alone Special Needs Trust in place, anyone can make a gift or inheritance that will support the beneficiary, and they can use the same stand-alone Special Needs Trust for that purpose.

When Should You Consider A Special Needs Trust?

You should consider a Special Needs Trust if someone you care about has a sickness, injury, disorder, or other impairment that limits their physical or mental abilities. Proper planning allows you to do the most good at the lowest cost. Contact us for help.