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Are You the Trustee of a Special Needs Trust?

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Jon J. Gasior, Attorney  Are you the trustee of a Special Needs Trust? Do you have a child with a disability that will receive government benefits? Disability planning is an often overlooked aspect of estate planning that requires unique considerations and a deeper understanding from all of the parties involved.

If you answered yes to either of the previous questions, you will need to be aware of what Special Needs Trusts are and how they work. A Special Needs Trust can take a few forms, but very generally, they are trusts that hold assets for a specific beneficiary. The beneficiary is most likely someone who has a disability and receives government assistance through Social Security and Medicaid. Since these programs are “means tested”, which means they have certain asset and income restrictions to be eligible, it is important to make sure that the person with the disability, or the beneficiary, does not receive any assets or income in their name, or they will be at risk of losing their benefits.

With a Special Needs Trust, there is a third party trustee. This is another person other than the beneficiary that has access to the trust assets and can use those assets for the beneficiary. By taking control out of the beneficiary’s hands, the beneficiary can remain eligible for those important government benefits. There are however some restrictions on how the trust assets can be used. The trust assets are to be used to supplement the government benefits, and not supplant them. For example, social security provides a program called supplemental security income which may be the only source of income for a person with a disability. However, this income is to be used for things like food and shelter. As a result, the trustee of a special needs trust may not pay for the beneficiary’s food and shelter. Examples of things that the trustee may pay for include:

  • Automobile/van services
  • Bus passes
  • Health club memberships
  • Clothing
  • Computers and electronics
  • Educational classes
  • Dental work not covered by private or public health insurance
  • Laundry services
  • Funeral expenses paid while beneficiary is living
  • Furniture
  • House cleaning
  • Laundry services
  • Legal services
  • Tickets for travel and vacations 

This list is not exhaustive but a good example of payments that the trustee can make for beneficiary. Planning for a special needs beneficiary takes time and assessment of assets, as well as the services received. If you have any questions about how to plan for a special needs beneficiary or how to administer a special needs trust, the attorneys at Sinclair Prosser Gasior can help.

https://spgasior.com/services/planning-for-those-with-special-needs/.

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