What is a Special Needs Trust?
May 3, 2008 by Kristina Chew, PhD
Filed under Health
Something that we are preparing to create for Charlie. A definition from Michael Davidov, Esq., in the April 30th Queens Courier:
A Special Needs Trust ensures that its beneficiary receives the benefit of assets transferred to the trust, while permitting the beneficiary to retain access to public government resources. Parents do not need to wait until their child turns eighteen before setting up a Special Needs Trust. Once the trust is established, the parents can place funds in the trust and the funds can be used immediately or stored for future use.
Under the terms of a Special Needs Trust, a Trustee manages the trust property to make certain it will last for the lifetime of the beneficiary. The Trustee has discretion to make distributions to the beneficiary for supplemental expenses that are not covered by government sources. Because the child is only a beneficiary, the child is not considered the owner of the trust property and still will qualify for resources provided by the government.
By setting up a Special Needs Trust, parents can be reassured their child will be taken care of. The Special Needs Trust is meant to supplement rather than replace government benefits. It provides the beneficiary with sufficient support to live life with more than just the basics provided by government benefits.
It’s something we need to start today for Charlie’s tomorrow.
More resources about estate planning, with a worksheet to help parents figure out costs and also from the National Special Needs Network, Inc..
I think there are two things slowing the process down for families. First it would be the cost of setting up the trust and the hardest is coming up with the person who would be the Trustee.
Can the parent be the trustee until they find someone willing to take on this challenge and is young enough to be around for this task?
I wrote this over a year ago and have not gotten any closer to doing this:
Resources on special needs trusts
http://www.bellaonline.com/articles/art49032.asp
I went to a seminar on this a few weeks ago. Here in Ontario, Canada it’s also called a “Henson Trust”. I don’t know how it works in the USA, but the estate planner and lawyer who spoke to us about this also told us that anyone else who has left money to Andrew in a will (grandparent, Godparent, etc) should also set up this trust for the special needs child. It’s something I have started to think about a lot, I have put off drawing up a will for a long time.
My school district is having a seminar on estate planning in a few weeks and I’m going to ask your question, Bonnie. It’s precisely trying to figure out who will be the trustee that has been hard for us. Charlie having no siblings, we have been considering one of my cousins’ children, all of whom are just a bit older than Charlie. However, they all live in California and don’t see Charlie too much.
I think the Henson Trust sounds the same—-we are ready to starting setting up the trust and have a will which designates my parents as guardians if anything happened to Jim and me. (Yes, very hard even to type that.) But of course, my parents are getting older and can’t be Charlie’s trustees.
Pick whomever you would like for the trustee: some people take a professional trustree. But the CRITICAL thing to remember is to build in an orderly transfer of the trustee’s position in the event of death or disability of the trustee. This isn’t a question that you answer once and forget – you need to think about all possible contingencies. Think about the succession of people you want in the position, how you want people chosen, and how you want the powers of the trustee orderly transferred.
My two cents. I’ve done some looking.
We have also been thinking about a trustee on the East Coast for Charlie. This particular issue can really bring up some tough questions and self-examination.
We set up a special needs trust over 4 years ago. One of the moms of the kids in Alex’s preschool at the time is an attorney, and because she had an autistic son, she specialized in wills and trusts for special needs families, so she is always up to date on this area.
Our attorney also told us to write up a document on Alex’s daily activities, his likes and dislikes, what has worked and what hasn’t, and anything else that impacts his life, including a list of treating physicians and medical problems. In the event something happened to even me, my husband is pretty clueless about the day to day, someone could read it and use it to help in a transition. Also, your views on things, like religion and how you are raising your child are important, as well as what you want for them, are important.
I am not good at updating this particular area, life is just so busy. But if something happened to me or to me and my husband, I want to make the transition as smooth as possible, so I am going to update it.
I found some good information on this topic at the sites you mention as well as Wright’s Law website. Each state varies in how the trusts need to be set up.
Thank you for another great and practical post, Kristina!
Karen
We just went through the estate planning process and signed the documents a couple of weeks ago. Andy and I had to have several heartfelt conversations over the course of several weeks to hash everything out. Like you, we are on the east coast and have no family here.
Couple things of note: many special needs attorneys operate on a sliding scale. Also, the trustee can be changed down the road if life takes you in a different direction…which we all know it routinely does.
It is nice for people who cannot afford govrnment
resources.