Planning For Special Needs Individuals
A trust is a set of rules for managing assets. The designated trustee manages the assets according to the rules of the trust for the beneficiary's benefit. A Supplemental Needs Trust, also known as a Special Needs Trust, is a special type of trust that can provide supplemental services to your loved one without jeopardizing their eligibility for government benefits.
You may create a Supplemental Needs Trust to care for a disabled child or grandchild regardless of the child's age. The Supplemental Needs Trust may be funded now, to help with their needs while you're still alive, or you can bequest funds through your will or trust that will flow into the Supplemental Needs Trust when you're gone. The trust can be used to provide such "extras" as second medical opinions, special educational equipment, supplemental types of therapy, vacations, recreational activities - in other words, all kinds of life-enhancing services the government does not ordinarily cover.
Supplemental Needs Trusts for Disabled Spouses
A Supplemental Needs Trust can also be useful if your spouse is receiving long-term care Medicaid benefits, or is likely to need them in the future. Under Texas law, when you pass away, your spouse is entitled to 30% of your "augmented estate," whether or not the assets are probated. If your spouse currently resides in a nursing home and is receiving Medicaid benefits, he or she may be thrown off the program when they receive their inheritance. If your spouse is at home but will likely need a nursing facility if you predecease them, receiving that 30% share may mean Medicaid benefits are not available until the 30% is completely exhausted.
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The good news is, under Texas law, you can leave that 30% or even more for your spouse in a Special Needs Trust, thus protecting his or her access to Medicaid benefits. The monies in the trust can be used for life-enhancing extras like private nurses, perhaps a specialized wheelchair, or custom transportation so that he or she can leave the nursing home to attend family functions. Through the trust you can also make provisions so that, when your spouse dies, any remaining trust assets pass to the beneficiaries and not the state.
Other Benefits of Supplemental Needs Trusts
Some parents think they can simply leave the inheritance to a brother or sister who will then take care of the disabled sibling. This offers no protection to the disabled person in the event the sibling runs into financial difficulties, has a divorce, or predeceases them. The Supplemental Needs Trust allows the sibling, as trustee, to manage the assets for the benefit of the disabled person while providing complete protection for the funds. Supplemental Needs Trusts also name back-up trustees to continue the trust in the event of the death or disability of the initial trustee.
Another advantage of Supplemental Needs Trusts is they facilitate continuity of care for the disabled person upon the surviving parent's death. Supplemental Needs Trust trustees may use and distribute assets for the benefit of the disabled person immediately after the parent's death. This is in contrast to a will, which must first be probated in a court proceeding to determine the will's validity and appoint an executor to handle the estate. These proceedings may be costly and tie up the estate assets for many months, or even years in some cases.
Many of us have a family member who is not self-sufficient and probably never will with a disabling mental or physical condition, or a spouse with Alzheimer's Disease. If you choose to protect that person financially, you have to be smart about how you go about it. At The Greening Law Firm PC our Supplemental Needs Trusts are specially structured based on each client's individual situation and needs.
You will want to consider visiting with us about implementing a Supplemental Needs Trust if you fit any of these conditions:
- You have a child or spouse who is currently receiving Medicaid or Social Security Disability payments
- Your child or spouse is likely to receive Medicaid or Social Security Disability disability payments in the future
- Your child or spouse currently depends on home care from you
- Your will names your special needs child or spouse as a substantial heir