Friday, March 4, 2016

Special Needs Trust

Thankfully, we live in a country where if an individual has special needs, the government is able to provide a financial cushion to help the person with their disabilities. One question that arises frequently in the arena of estate planning is the impact an inheritance has on a mentally or physically disabled person who receives governmental assistance.

Typically, an inheritance, whether through a will or trust, will disqualify an individual from receiving government benefits such as Social Security and Medicaid.  The only way to avoid to such an occurrence is by establishing a Special Needs Trust.  A Special Needs Trust is specifically designed for a grantor to provide for a disabled person without imposing any limitations on the government benefits they receive.  Essentially, the trust is the owner of the property and the trustee controls and disperses the money/property to the beneficiary.

One of the largest disability benefits provided in the United States comes from the U.S. Social Security Administration.  The SSA website provides a guideline as to how exactly the Special Needs Trust should be structured in order to avoid any issues in regards to a persons eligibility for Social Security assistance. The beneficiary may:

NOT control the payments provided by the trust
NOT change the trust or use of the established property
Essentially, the disabled individual may have no control over the trust income. Only the trustee can have said control.

When involved in protecting the sustainability of a special needs victim, I would recommend contacting an estate planning attorney in the New York City area to help you with setting up a Special Needs Trust and a Guardianship. Both of which are crucial tools in ensuring your loved ones with battles most of us don't face on a day to day basis are provided with the financial security they are entitled to.

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