Special Needs Planning

Special Needs Planning

From Martha’s interview for the Masters of Estates & Probate series on ReelLawyers.com.

Mitchell, Brown & Associates can assist families with estate planning for those with disabilities. We prepare and administer Special Needs Trusts. We can develop an estate plan through the preparation of a Special Needs Trust which will protect public benefits eligibility.

When should a Special Needs Trust be set up?

Parents may consider setting up a Special Needs Trust, also referred to as an SNT, when they begin their estate planning such as drawing up wills. If their child with a disability will likely have long-term medical or support needs, the SNT can be a vehicle to supply the funding to provide lifetime quality care. Even if the child’s future prognosis is unclear, it is never too early to put plans in place for contingencies such as the parents’ sudden death or disability.

How is a Special Needs Trust set up?

The laws governing trusts are complex and are subject to changes in legislation that may vary by state and which could affect a person’s eligibility for the government benefits. New laws have considerably tightened the eligibility criteria for receiving government benefits, and thus have affected many aspects of Special Needs Trusts. These regulations are complex and require a knowledge of the current legislation and how it impacts people planning for their child with special needs in order to preserve eligibility. Setting up a special needs trust requires coordinated planning with an attorney knowledgeable in special needs planning.

When a parent or grandparent dies, additional assets can be distributed under a will, to the SNT. A percentage of shares in an estate can be left to a child’s SNT. Funding can come from discretionary contributions while parents are alive, probate distributions, a living trust, life insurance, pension plan, or other sources. Therefore, the individual with a disability does not have to be left out of a will, but should have their share of inheritance directed to his or her SNT. In the case of a life insurance policy, pension plan, or other source that would go to a beneficiary on death, the child’s SNT should be the beneficiary.

Managing the Special Needs Trust

Having a SNT requires that a trustee be appointed. A trustee is one who manages another’s property and may be a person or an institution such as a bank. In this case, the trustee is the manager of the trust and has general unlimited discretions to use trust proceeds provided for the needs of the individual with a disability. The trustee may be given full discretion to manage the money in the trust and to decide how the money is used for the person’s benefit. The SNT should be drafted in such a way as to direct the trustee how to use the trust’s resources for the individual’s needs.

Trustees should have good money management and/or financial skills. The SNT will likely exist for a long period of time. Trustees should be chosen with longevity in mind, and the trust itself should be drafted to adjust to changing circumstances, such as the substitution or removal of a Trustee.

After the death of the individual with a disability, the trustee oversees the final arrangements and the SNT usually ends.

We encourage you to contact our St. Louis attorneys to get the advice you need. Together, we can discuss your long-term goals and advise you on planning that will allow you to reach those goals.