Estate planning is an important way for every parent to prepare for the inevitable, but it is doubly important for families when special needs children are involved. Future care plans must be carefully thought through, and individuals and assets must be designated to carry them out. Creating a Special Needs Trust (SNT) is a wise way to ensure the wellbeing of children who will require care beyond parental lifespans.
Ensuring Eligibility For Benefits
Given the needs individuals with special needs have throughout their lifetimes, public support, in the form of Medicaid and Supplemental Security Income (SSI), is essential for most families. To supplement the basic services provided through these benefits, private assets are vital too, though these dollars cannot interfere with the eligibility criteria for public funds. By placing private assets in a special needs trust, families can ensure that loved ones receive both public dollars and private support throughout their lives:
Sometimes called a “Supplemental Needs Trust,” and often referred to simply as a “SNT,” this specialized trust allows assets that family members and friends contribute to it to pay for goods or services that are in the beneficiary’s best interest, while also maintaining the beneficiary’s eligibility for means-tested government assistance programs. In planning for an individual with special needs, money is not everything – there may be residences or programs that require the person with special needs to be eligible for benefits such as Medicaid or SSI and do not accept private payment. A SNT allows the beneficiary to have the best of both worlds.
Whenever any type of trust is created, one or more fiduciaries, referred to as trustees, must be designated to administer it in accordance with the intentions detailed in the trust agreement. It is especially important to carefully consider trustee designation when it comes to an SNT, and the National Law Review offers these pointers:
In selecting your trustee, the most important qualifications are loyalty and competency in administering the trust. The trustee is the quarterback of the plan who can hire financial advisors, attorneys, accountants, bookkeepers, social workers, and care managers. The trustee can delegate, but must oversee everything. Corporate trustees are an option if the trust is large enough. Look for a bank with special needs experience and a willingness to administer an SNT. If you use a corporate trustee, consider adding an individual family member or friend as a co-trustee to work with the corporate trustee who has expertise in SNTs.
Attorneys at Chambliss, Bahner & Stophel, P.C. further point out that the trustee of a Special Needs Trust must have “sole and absolute” discretion, a standard legal requirement when determining beneficiary eligibility for SSI or Medicaid,” and note that it is possible to also appoint a “trust protector with authority to remove the trustee if they are acting out of self-interest.” Once trustees are chosen, it is common practice—and often required—for the designees to obtain trustee bonds. Essentially, a trustee bond is a specific type of fiduciary bond that protects the interests of the trust and its beneficiaries in accordance with applicable laws. As a leading national provider of all types of fiduciary bonds, Colonial Surety makes it easy and efficient to obtain trustee bonds.
Perspectives: Taking The Place of Parents?
It’s especially agonizing for the parents of special needs children to think about what the future holds. Though not a replacement for their own loving presence, careful and detailed planning takes on extra significance, as Madison Gunn of Absolute Trust Counsel observes: “For parents of special needs children, the estate plan is much more than a vehicle for the transfer of wealth to the next generation. The plan must take the parents’ place in their child’s life.”
Given the importance of providing as much clarity as possible to everyone who will have a role in the ongoing support of a special needs individual, writing a letter of intent, in tandem with establishing an SNT, can be very helpful: “This letter is an opportunity to personalize your hopes and dreams and describe the daily routines of your child’s life and with whom they interact. Writing a letter of intent can serve as a particularly important resource for a nonparent trustee or new caregiver. Information about the child’s unique needs and preferences, functional abilities, interests, routines, and critical medical information help characterize how your child can live their best life.”
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