Mistakes to Avoid when Creating a Special Needs Trust in Cranberry Township
A Special Needs Trust (also called a Supplemental Needs Trust) is a legal document that holds assets for a person with disabilities, while also providing legal authority for a trustee to manage money and make financial decisions on behalf of the individual with special needs. The Special Needs Trust
also helps ensure there are enough financial resources available to meet the individual’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 a person with special needs 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 with disabilities a large inheritance when they die, but this is a mistake. While an inheritance may give the child a “cushion” for the future, it could cause him or her to become ineligible for benefits that the child relies on for healthcare and other day-to-day needs. The good news is that 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. But, the Special Needs Trust must be set up correctly
to ensure it works as planned. To that end, it’s important for parents of special needs children and adults to avoid the following mistakes when creating a Special Needs Trust.
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.
Cutting Corners with “DIY” or Online Options
Special Needs Trusts should be created by a lawyer who focuses in this area of the law
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 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 and Forgetting It
A Special Needs Trust is a living document that is flexibly designed to meet the changing care needs of a person with disabilities. 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 the individual’s life.
A Special Needs Trust is a complex document that is designed to support and protect a person 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 associated with creating a Special Needs Trust, while also providing families with a roadmap for a secure future.
If you have questions about Special Needs Trusts or you need assistance getting started, please feel free to contact our law firm
to set up an appointment.