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Special needs trust

Posted October 08, 2014 in Advice Column, Clive

Caring for family members and loved ones with special needs is a priority for many families. Parents often worry about their ability to provide for children with special needs when the parents pass away. Parents may spend years planning and saving for the future needs of their special needs children with the goal of providing them with a comfortable quality of life. However, careful estate planning is paramount to ensuring that special needs children are able to maximize the benefits available to them.

Individuals with special needs are often eligible for public benefits programs. However, eligibility for many of these programs is based on financial need and may not be available for those with access to other financial support. As a result, parents who leave assets to a special needs child through a will or outright gift risk jeopardizing the child’s eligibility for certain public benefits.

In order to circumvent this problem, some parents leave assets to another family member to manage and distribute for the benefit of a special needs individual. This arrangement poses problems of its own by increasing the potential for misuse or loss of assets. In such an arrangement there is nothing preventing the family member holding the assets from using funds for his or her own benefit rather than for the benefit of the special needs individual. It also opens the door for claims of creditors of the person holding the assets which increases the risk of loss.

Instead, it is wise to consider a supplemental needs trust. A supplemental needs trust can provide assets for a special needs individual while also ensuring eligibility for public assistance funds. A supplemental needs trust requires careful and deliberate planning and drafting in order to accomplish these goals.

For example, it is important that the beneficiary of the trust not be allowed to have ready access and discretion as to distributions of the funds. Instead, discretion as to distribution should be given to an independent trustee. The trustee will typically distribute funds to the special needs beneficiary to help pay expenses that are not provided for by public benefits programs.

Determining whether a supplemental needs trust is appropriate for your family is an important consideration when planning for the future of a special needs family member. Consult with your attorney and other advisors involved in your estate plan to determine what course of action is best for your family.

Information provided by Nathaniel Tagtow, JD, assistant vice president and trust officer, Lincoln Savings Bank, 13523 University Ave., Clive, 515-221-9876,

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