As the parent of a teenager with autism, I know that parenting a child with special needs can be overwhelming. Every day brings unanticipated challenges and concerns. We live with uncertainty. One of our greatest worries is what will happen to our son when we are gone? If you have a disabled child, you probably have the same concern. Planning ahead will afford you and your family options and, hopefully, peace of mind.
Special Needs Trusts
Special Needs Trusts are a way to protect the financial security of disabled children. These Trusts allow a disabled individual to receive inheritances, gifts, or other funds, and maintain eligibility for means-based public assistance programs like Medicaid or Supplemental Security Income. It is important that these trusts be written in such a way so that the funds will not be considered as belonging to the disabled beneficiary, or risk disqualifying him or her from benefits. Distributions from these trusts can be used to pay expenses not covered by SSI like education, entertainment, and hobbies.
Two Types of Trusts
There is more than one kind of Special Needs Trust. For example, first-party special trusts are funded with assets owned by the disabled person (through inheritance, a court settlement, etc.). These trusts must be approved by the Department of Human Services and the Social Security Administration. Upon the death of the beneficiary, the state is reimbursed to the extent that the beneficiary received Medicaid benefits via a “pay back” from the remaining trust assets.
In contrast, a third-party special needs trust is created on behalf of the disabled person with funds that do not belong to that individual. These trusts are frequently funded by parents or grandparents. The creator of the trust can designate a remainder beneficiary and avoid a payback.
Special needs trusts are complex, but will provide you and your family peace of mind. It is very important that you speak to experienced counsel who can help navigate you through these issues. Please call the attorneys at Wuliger & Wuliger at (216) 781-7777 to schedule a special needs planning consultation.