Special needs planning is more than simply the drafting of special needs trusts. It is about a conversation involving needs, desires, and options. Open communication between the person establishing the special needs trust and the attorney drafting the trust is essential. There must be an understanding of the donors’ motivations for establishing the special needs trust and their intentions for the use of the trust with respect to the needs of the beneficiary. Also of importance is an exploration of present and future goals related to the lifetime care needs of the person who is disabled.

Special needs trusts are established to provide for the present and future needs of a person with a disability. Special needs trusts may be funded with assets of an individual—such as an inheritance, a financial gift, or a personal injury settlement, in such a way that the person’s eligibility to receive government benefits such as Medicaid and Supplemental Security Income is not compromised. It is important to understand the different types and the administration of special needs trusts and their value to special needs planning for people with disabilities.

The primary purpose of a special needs trust is to supplement the benefits an individual with disabilities receives through a government program. Special needs trusts protect the assets of a mentally or physically disabled person while allowing that person to keep his or her public benefits such as SSI and Medicaid. However, it is important to realize that a special needs trust’s usefulness goes beyond preserving eligibility for government sponsored benefits. The use of a special needs trust can also create or maintain eligibility for valuable community programs and services. Many times, a person with a disability relies on his or her placement in community based programs to provide community integration as well as social and vocational opportunities. In a situation where there is no special needs trust, or where a trust is improperly drafted, an unexpected financial gain, or an inappropriate disbursement could rob a person who is disabled of his or her chance to participate in life-enriching opportunities.

Special needs trusts are instrumental in estate planning for individuals with disabilities. There are three types of commonly used special needs trusts, each with different requirements for establishment, administration, and distribution of trust assets upon the death of the primary beneficiary. With each type of special needs trusts, the trustee must pay close attention to the rules of the Department of Public Welfare and the Social Security Administration in order to ensure that the trusts are properly managed.

For more information on special needs planning and special needs trusts, call Steinbacher, Goodall & Yurchak at 1-800-351-8334.