Absolutely, a properly structured trust can provide significant support to beneficiaries with disabilities even if they are not currently receiving government assistance programs like Supplemental Security Income (SSI) or Medicaid. This is a common concern for families wanting to ensure their loved one with special needs is well cared for without jeopardizing potential eligibility for crucial services, but it’s entirely achievable with careful planning. The key lies in utilizing a “Special Needs Trust” (SNT), also sometimes referred to as a Supplemental Needs Trust, which is specifically designed to hold assets for the benefit of a disabled individual without disqualifying them from needs-based government benefits. These trusts operate on the principle of *supplementing*, not replacing, government assistance. According to the National Disability Rights Network, approximately 61 million adults in the United States live with a disability, highlighting the critical need for effective estate planning tools like SNTs.
What are the biggest concerns when providing for a disabled beneficiary?
One of the primary concerns is the “resource limit” imposed by many government benefit programs. For example, in 2024, the SSI resource limit is $2,000 for an individual. Any assets exceeding this limit can disqualify the individual from receiving benefits. A Special Needs Trust circumvents this rule because the assets *within* the trust are not considered resources owned by the beneficiary. Instead, the trust owns the assets, and the trustee manages them for the beneficiary’s well-being, covering expenses not paid for by government programs, such as therapies, recreation, travel, or specialized equipment. It’s important to note that distributions from the trust must be used for things *above and beyond* what government benefits already cover; otherwise, they could indeed impact eligibility. A well-drafted trust agreement should clearly outline these permissible uses to ensure compliance.
How does a trust work when a beneficiary already has assets?
Let’s say Mr. Henderson, a San Diego resident, had diligently saved a small inheritance for his son, David, who has autism. David wasn’t receiving SSI or Medicaid, but Mr. Henderson worried about future care costs and wanted to protect those funds. He also didn’t want those funds to affect any potential future eligibility for aid. He consulted with Ted Cook, and they established a third-party Special Needs Trust, funded with the inheritance. This allowed David to continue living independently and pursuing his passions without impacting his financial standing. The trust allowed for funds to be used for art supplies for David’s painting hobby, specialized computer software to aid his communication, and occasional travel to art workshops – things not covered by his current income and standard living expenses. The trust document specifically outlined these types of supplemental expenses, ensuring everything was legally sound.
What happens if a trust isn’t set up correctly?
I remember a case involving a lovely woman named Maria, who unfortunately did not consult with an attorney before attempting to establish a trust for her daughter, Sofia, who has Down syndrome. Maria, thinking she was doing the right thing, simply deposited a significant sum of money into an account labeled “For Sofia’s Care.” When Sofia later applied for SSI, her application was denied due to the funds being considered countable assets. Maria was heartbroken and overwhelmed, as she had intended to secure her daughter’s future but inadvertently jeopardized vital benefits. She then came to us, and we were able to restructure the funds into a properly drafted SNT, but it involved a lengthy and complicated legal process, and some delays in Sofia receiving the benefits she was eligible for. This is a stark reminder that even well-intentioned efforts can go awry without expert guidance.
How can a San Diego Estate Planning Attorney help?
Establishing a Special Needs Trust requires a deep understanding of complex regulations and careful drafting to ensure compliance with both federal and state laws. Ted Cook and his team at his San Diego practice specialize in these types of trusts, helping families navigate the intricacies of estate planning for loved ones with disabilities. We work closely with families to understand their specific needs and goals, creating a trust tailored to their unique circumstances. This includes determining the appropriate type of trust (first-party or third-party), identifying the trustee, and outlining the permissible uses of trust funds. Ultimately, the goal is to provide peace of mind, knowing that your loved one will be well cared for, both now and in the future, without compromising their access to essential government benefits. A properly structured trust offers a lifeline of support, ensuring a brighter and more secure future for individuals with disabilities and their families.
Who Is Ted Cook at Point Loma Estate Planning Law, APC.:
Point Loma Estate Planning Law, APC.2305 Historic Decatur Rd Suite 100, San Diego CA. 92106
(619) 550-7437
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