What is a Special Needs Trust?

What is a Special Needs Trust?

AdobeStock_123475684.jpegParents with children who have special needs understand the challenges faced when providing for the care and upkeep for their child. Whatever the challenge, they meet it head-on and tackle every obstacle to ensure their child receives the medical and personal care he or she requires. However, many parents worry about what will happen to their child when they pass away or if they become incapacitated. Who will take care of my child? How will my child receive what he needs? Can I trust someone to take care of his money?

When your child has special needs, you need to consider these questions and more. Our Michigan trust attorney can help you with the answers. We can help you design a special needs trust that can provide for your child even after your death. Call 888-390-4360 to schedule an appointment with our attorney to discuss the steps you need to take to create a special needs trust for your child.

What is a Special Needs Trust?

Trust agreements are designed to accomplish a variety of goals — a special needs trust is no different. The goal of a special needs trust is to provide for the long-term needs of a person who requires lifelong personal and/or medical care. With a special needs trust you can provide for:

  • Personal care or companionship care;
  • Payment of household services that the person cannot perform such as yard maintenance, cleaning, cooking, etc.
  • Medical treatments and dental expenses
  • Transportation
  • Insurance
  • Education
  • Training programs or rehabilitation programs
  • Entertainment, vacations, and recreation
  • Household items and personal items
  • Purchase a home (must be careful of exceeding Medicaid requirements)
  • Purchase a vehicle (must be careful of exceeding Medicaid requirements)
  • Funeral, burial, and life insurance

With a special needs trust, you can ensure that your child will be cared for after you are no longer to provide this care. However, you must be careful when creating and using a special needs trust because you can jeopardize your child’s federal and state benefits.

How is a Special Needs Trust Funded?

First Party Special Needs Trust (first party) and Third Party Special Needs Trust (third party) are funded in different ways. With a first party trust, the money used to fund the trust belongs to your child. It could be money received from inheritance, a personal injury lawsuit, or another source. A third party trust is funded by another party’s funds, such as your personal assets. How you choose to fund the trust is very important.

A third party trust can be funded during your lifetime or upon your death. Therefore, you can name the trust as an heir of your estate, so the money you intend for your child never passes to him or her. This is important for SSI benefit and Medicaid planning. However, if your spouse did not set up a third party trust or your child inherits from another person, you can still place the funds in a first party trust, provided the trust is set up before your child reaches the age of 65 years. Furthermore, the State has a claim against a first party trust when your child dies.

Medicaid Planning and SSI Benefit Planning with a Special Needs Trust

For most families caring for a child with special needs, it is vital that they receive state and federal benefits to offset the cost of care. However, if you are not careful, you could lose those benefits if your child exceeds the asset and income requirements to qualify for these benefits. Therefore, it is equally important to include Medicaid planning as part of the process to establish a special needs trust.

The key is to place assets for your child in a trust that he or she does not control and limit the use of those funds, so it does not interfere with the receipt of any government benefits. A Michigan trust attorney with extensive experience in Medicaid planning can help you take the steps needed to ensure your child receives benefits and has a plan in place for his or her long-term care.

Working with a Michigan Special Needs Trust Attorney

At The Elder Care Firm of Christopher J. Berry, CELA, we understand how stressful it can be to worry about your child’s future. We want to help you put the documents in place that will protect your child in the event you are unable to do so.

Contact our office by calling 888-390-4360 or use our online contact form to request more information or schedule an appointment with our Michigan trust lawyer.


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June 12, 2017