Supplemental Special Needs Trust
|
Supplemental Special Needs Trust for Disabled Family Members?
Skokie, Glenview & Northbrook, Illinois Law Firm
If you are responsible for taking care of a family member who will never be able to take care of him/herself, planning your estate is critical. Even if you are not primarily responsible for such a beneficiary, consider that a direct gift, during your lifetime or upon your death, can wreak chaos on his/her life.
If a beneficiary has legally recognized special needs, issues extend beyond the ability to handle money. Government-sponsored group housing provides future food and shelter. Enrollment in work, educational, rehabilitative and social programs may be part of the equation for a meaningful life. Government stipends may provide additional bare support.
A trust can ensure that your money will enhance future lifestyle needs without giving money outright, which could disqualify a special-needs beneficiary from financial aid or program participation. In many cases you can't even buy your way into programs that are reserved for the special-needs indigent person. But your special-needs beneficiary doesn't have to be completely indigent and at the mercy of the system, especially if a little extra money can make a big difference. He/she just cannot have control over assets.
One way to keep a special-needs beneficiary indigent is to disinherit that person and have an unwritten "understanding" with another beneficiary who can step in to provide the extra help that you envision. Unfortunately, moral obligations aren't always followed. You may be lucky enough to have another stellar beneficiary who always does the right thing, but that life-script can change abruptly and unexpectedly, with money going to someone else. Would your son-in-law have the same moral obligations or simply ignore them?
A discretionary supplemental special-needs trust, or SSNT, is an essential tool for these types of situations. An SSNT allows a trustee named by you to supplement whatever needs the special-needs beneficiary has that are not covered by any governmental program. The SSNT is intended not to be used to provide basic food, clothing, and shelter, nor be available to the beneficiary to be used for such items, until all local, state, and federal benefits for which the beneficiary is eligible as a result of special needs have first been fully expended for such purposes.
The trustee may have the discretion to pay for extra quality-of-life expenditures such as:
- the cost differential between a shared room and a private room
- the cost of vacations, especially to visit family living in another locale
- the cost of a companion or attendant necessary to make travel and similar activities possible
- reimbursement for attendance at or participation in recreational or cultural events, conferences, seminars and training sessions
- elective medical, dental, or other health services not provided through a program
- exercise equipment
- computer hardware and software; audio and video equipment including radios, TV, DVDs, etc.
- subscriptions to newspapers and magazines
- additional food, clothing, and other expenditures used to provide dignity, purpose, optimism, and joy to the beneficiary.
The payments referred to above are made directly to providers so that they don't disqualify or interfere with government assistance.
Additional instructions that can give you piece of mind may be given to the trustee (or someone the trustee designates) to visit the special-needs beneficiary on a regular basis and inspect the beneficiary's living conditions, evaluating such things as:
- physical and dental examination by an independent physician and dentist
- evaluation of the beneficiary's grooming and overall appearance
- evaluation of education and training programs
- evaluation of work opportunity and earnings
- evaluation of recreation, leisure time, and social needs
- determination of the appropriateness of existing residential and program services, and
- evaluation of the legal rights to which the beneficiary may be entitled, including free public education, rehabilitation, and programs that meet constitutional minimal standards.
An SSNT funded with the special-needs beneficiary's own funds, is Self Settled,(or Payback or OBRA) and must provide that government agencies be reimbursed from trust funds remaining when the beneficiary dies.
If you fund the SSNT, it is considered a Third Party trust. Any funds remaining upon the special-needs beneficiary's death are distributed to the contingent beneficiaries you designate and are not subject to claims from government agencies.
Types of Trusts We Establish:
- Revocable/Irrevocable Trust
- Irrevocable Life Insurance Trust
- Supplemental Special Needs Trust
- Generation Skipping Trust
- Charitable Trusts
- Credit Shelter/Applicable Exclusion Amount Shelter Trust
- Pet Trust
- Estate Freeze Trust
- Qualified Personal Residence Trust (QPRT)
- Qualified Domestic Trust
- Life Partner and LGBT
