A Special Needs Trust (also called a Supplemental Needs Trust) is a legal tool that allows someone of the family’s choosing to be in charge of managing money and making decisions on behalf of a child with disabilities. The Special Needs Trust also helps to ensure there are enough financial resources available to meet the child’s long-term care needs, without jeopardizing eligibility for state or governmental aid. This aspect is key, as benefits such as Social Security or Medicaid are very limited and cannot possibly cover all expenses your child may need to live out his or her life in a secure and comfortable way.
Unfortunately, many parents think that the answer to this problem is to leave their child a large inheritance when they die someday…but this is a mistake. While an inheritance may give your child a “cushion” for the future, it could cause him or her to become ineligible for benefits that the child may rely on..
Again, the good news is that creating a Special Needs Trust can help preserve eligibility for benefits while also making sure there is enough money available for the child’s future care needs. But, the Special Needs Trust must be set up correctly to ensure the trust works as planned.
To that end, it’s important for parents of special needs children and adults to avoid the following mistakes when setting up this legal document:
- Procrastination: When you have a child with special needs, it’s a huge mistake to put off planning. You just never know when you might become incapacitated or die. But, it is even more critical for parents of special needs kids to plan early. That is because a child with special needs may not be able to work and provide for their own financial well-being when they become adults. Having a Special Needs Trust set up while the child is still young will allow others to make contributions and gifts through the years in a way that doesn’t penalize the child financially.
- Trying to cut corners with “DIY” or online options. Special Needs Trusts should be created by a lawyer who focuses in this area of the law. That is because special needs trusts are subject to both federal and state laws and the laws of each state can vary. Likewise, the ins and outs of benefit programs are complex, and you’ll want to work with an attorney who is well-versed in the options available to your family.
- Failing to educate trustees on expectations and duties: Being selected to serve as a trustee of a child’s Special Needs Trust is a big responsibility Before choosing a trustee, we recommend talking to that person about what may be expected of him or her when the parent is no longer able to manage the child’s trust funds.. It may even be helpful to bring your desired trustee in to meet with your special needs planning attorney who can run that person through some of the specific responsibilities he or she will take on, such as paying the child’s bills.
- “Drafting it and forgetting it.” A Special Needs Trust is a living document that is flexibly designed to meet your child’s changing care needs. To that end, a Special Needs Trust should be updated every few years to ensure that the document is up-to-date and reflects a current snapshot of your child’s life.
A Special Needs Trust is a complex document that is designed to support and protect a child with special needs through all of the transitions that he or she may face. Working with an experienced attorney can help avoid making one of the common mistakes mentioned above, while also providing your family with a road map for a secure future.
If you have questions about Special Needs Trusts or you need assistance getting started in creating a Special Needs Trust, please feel free to contact the Law Office of Sheri R. Abrams at (571) 328-5795 to set up an appointment.
Original article: 4 Mistakes to Avoid When Creating a Special Needs Trust
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