By: Steve Worrall, Marietta GA special needs attorney
As a Marietta special needs attorney, I’m often asked, “What exactly is a Special Needs Trust?”
For starters, a special needs trust is a legal entity created to hold assets of a person with a mental or physical disability. The trust names a trustee whose job is to manage the assets and distribute them according to the provisions of the trust. There are specific limitations on the way assets can be distributed so that they do not disqualify the beneficiary from eligibility for government programs.
There are two primary types of special needs trusts. They are:
Self Settled Special Needs Trusts
In a self-settled special needs trust the assets in the trust belong to the beneficiary. For example, if the person becomes disabled due to the negligence of a doctor or car accident, it is possible that the beneficiary received a settlement as a result of litigation. In this case, a self-settled special needs trust would be created for the beneficiary to receive and hold the settlement funds in order to preserve government benefits.
Third Party Special Needs Trusts
A third party special needs trust is created by a third party with assets that belong to the third party. For example, the parents of a child born with Down syndrome or autism might create a special needs trust for their child as a part of their overall estate plan. In the case of a third party special needs trust, family members may make lifetime gifts to the child.
Distributions for Special Needs Trusts
In order to preserve government benefits, it is important to direct the trustee not to pay for services that are provided by a government agency. If done correctly, the assets in the special needs trust will not be counted as a resource. The trust must authorize distributions only for special or supplemental needs. Some examples of this might include dental care, specialized therapy, and services of a caregiver. Improper distributions of a special needs trust can cause a loss of government services, so it is critical that the trust is set up and then managed properly.
Who Should Create a Special Needs Trust?
Not all Georgia estate planning attorneys have the training, expertise or knowledge to create a special needs trust. You should consult with an attorney who is experienced in creating these trusts and who knows how to properly advise trustees.
The documentation that you create with your special needs planning lawyer in Marietta will be quite detailed and will take an incredible amount into consideration, but it will likely not cover every possible concern or wish you may have for your child’s future care. For that purpose, many parents work with their lawyer to create a Letter of Intent.
The Letter of Intent is along the lines of a personal letter, rather than being a more formal legal document. It is used to supplement the special needs plan in order to provide additional information.
Uses for the Letter of Intent
- Parents often use it to address wishes that they have which don’t really fall under the purview of legal requirements.
- This document is also useful for addressing information about your child that is subject to change. While various other special needs planning documents tend to be more static, the Letter of Intent can be changed out as the information in it needs to be updated.
- Finally, a Letter of Intent is used to discuss topics that are just too lengthy to include in the special needs trust.
The letter is typically addressed to the people who will be caring for your child once you are unable to fulfill that role. When the time comes, your attorney will share the Letter of Intent with the child’s caregivers, as well as with the trustee. They can use the letter to help interpret your desires and to help follow through on the wishes you have for your child.
Where to Get the Letter
Your special needs attorney in Marietta can help you draw up your Letter of Intent as a supplemental piece of your special needs trust. You may also wish to download a template for organizing your thoughts. As with any online resource, be sure to have your attorney review the document and offer advice and recommendations. At Georgia Estate Plan: Worrall Law LLC, we’re happy to help. Call us at 770-425-6060 and let’s schedule a Georgia Family Treasures Planning Session at no charge to those readers of this blog post.
For families with special needs individuals, ensuring the care for their loved ones once the caretakers are gone is of the utmost priority. The loss of specialized care and Medicaid or SSI benefits is a very real danger if proper special needs planning is not put in place, which is why Atlanta special needs lawyers often share the benefits of special needs planning involving Special Needs Trusts.
What is a Special Needs Trust?
Since even a small amount of cash assets can disqualify special needs individuals from the care and assistance they need, it is important to not let these assets pass directly to them upon your passing. A Special Needs Trust is the best way to ensure your special needs loved one keeps their care and assistance while also benefiting from the legacy you leave behind. Atlanta special needs lawyers design these Trusts in such a way that the assets in it do not belong to your special needs beneficiary; instead, they are owned by the Trust and managed by a Trustee of your choosing who will direct the assets to be used for the benefit of your special needs loved one. Medicaid and SSI will ignore the assets in the Special Needs Trust as they are not directly owned by your special needs loved one.
How may the assets in a Special Needs Trust be spent?
Assets in a Special Needs Trust can be spent in a number of ways which benefit the special needs individual. These include education, recreation, vacations, home improvement, and certain out-of-pocket medical expenses. These expenses are considered “non-countable” by Medicaid and SSI since they do not count as the special needs individual’s personal assets. Atlanta special needs attorneys caution that assets in a Special Needs Trust may not be given directly to the special needs individual, as this will oftentimes disqualify them from receiving state assistance.
What if I don’t have a Trustee or I’m not leaving behind a large sum of money?
In cases where a suitable Trustee cannot be chosen or a small or moderate sum of money is being left behind, Atlanta special needs lawyers often direct their clients towards Pooled Trusts. Pooled Trusts are typically run by non-profits which manage the assets for special needs individuals. The non-profit will assign a Trustee who is responsible for managing the assets on behalf of the special needs individual; the benefit of such an arrangement is that the Trustee and the non-profit are both heavily involved in the special needs community and understand the care and compassion needed to look after your special needs loved one. While there are fees and different types of services attached to Pooled Trusts, they are often a good alternative to an individual Special Needs Trust in certain situations.
If you have any questions about how a Special Needs Trust can benefit you and your loved ones, please contact us at 770.425.6060 to schedule a consultation.
Special needs planning attorneys in Atlanta have very specialized knowledge that can help families plan for their children’s future. There are so many things to keep straight when it comes to raising your special needs child, and focusing on what will happen to him or her after your death is not something that is pleasant to contemplate. Still, it is very important to take the time to meet with a special needs planning attorney in Atlanta in order to give your child the best opportunities.
An Important Tool
Special needs planning is a part of estate planning, and one of the most common things an Atlanta GA special needs atttorney is likely to advise will be a “special needs trust.” The reason that this trust is so important is that it allows you to set aside money for your child’s future without jeopardizing his or her eligibility for government benefits such as Social Security and Medicaid. Unfortunately, leaving your child even a small inheritance can make it so he or she is no longer eligible for this kind of aid and can severely impact quality of life.
Trusts for Your Child
There are different types of trusts that the attorney will go over with you. Some are funded by the person with special needs, say through an award from a personal injury case or from an inheritance. Others are specifically funded by a third party such as parents or other family members. The second kind is the special needs trust, and if it’s the right choice for you, a qualified Georgia special needs trust attorney will be able to help you understand your options with the trust.
People to Consider
In addition to helping you set up the trust, a special needs attorney will also be able to help you determine the appropriate trustee. In some cases, this may be a family member or other caregiver. In other cases, the lawyer or firm may take care of the administration of the trust. An advocate may also be chosen. This person will be familiar with both the beneficiary’s needs and the intentions and wishes of the person creating the special needs trust.
Using the Trust
When the trust is set up, the person creating it (called the “grantor”) has a say in how the funds are to be used. For example, money can be dedicated to the daily needs of the beneficiary. Dispersal schedules can be created, as well. In this way, rather than giving someone a single lump sum, you can set up a situation where monthly allotments are made. The advocate would understand this and work with the trustee to make sure the terms were being followed in the beneficiary’s best interest. At the same time, the trustee is charged with managing the funds through investments or other means that keep the trust funded.
Of course, this is just an introduction to the possibilities of a trust. For a much fuller understanding and to get the ball rolling, we invite you to contact our Atlanta special needs attorneys who are knowledgeable about the field, as well as how Georgia’s state laws come into play. To schedule a Georgia Treasures Planning Session (valued at $750) at no charge, simply call 770.425.6060 and mention this article.
Most parents choose to leave their estates equally to their children. But sometimes, parents intentionally choose to not leave anything to a child. There may be what the parents consider to be a legitimate reason: one child has been more financially successful than the others; not wanting a special needs child to lose government benefits; or not wanting to leave an inheritance to an irresponsible or drug-dependent child. Sometimes a parent wants to disinherit a child who is estranged from the family, or to use disinheritance as a way to get even and have the last word.
Regardless of the reason, disinheriting a child is hurtful, permanent, and will affect that child’s relationship with his or her siblings. The courts are full of siblings who sue each other over inheritances but even if they don’t sue, it is highly unlikely they will be having family dinners together. Money aside, there is symbolic meaning to receiving something from a parent’s estate.
Disinheriting a child may be short-sighted and even completely unnecessary. For example:
* A child who appears to be more successful financially may have trouble behind the scenes. The inheritance may be needed now or in the future: finances can change, marriages can collapse, and people can become ill. And unless specific provision is made for them, grandchildren from this child will also be disinherited.
* A spouse, child, sibling, parent or other loved one who is physically, mentally or developmentally disabled—from birth, illness, injury or even substance abuse—may be entitled to government benefits now or in the future. Most of these benefits are available only to those with very minimal assets and income. But you do not have to disinherit this person. A special needs trust can be carefully designed to supplement and not jeopardize benefits provided by local, state, federal or private agencies.
* A child who is irresponsible with money or is under the influence of drugs or alcohol may not be the ideal candidate to receive an inheritance of any size. But this child may need financial help now or in the future, and may even become a responsible adult. Instead of disinheriting the child, establish a trust and give the trustee discretion in providing or withholding financial assistance; you can stipulate any requirements you want the child to meet.
How we choose to include our children in our estate plans says a good deal about our values and faith. Not disinheriting a child who has caused grief and heartache can convey a message of love and forgiveness, while disinheriting a child, even for what seems to be good cause, can convey a lack of love, anger and resentment.
If you have previously disinherited a child and you have since reconciled, update your plan immediately. If your decision to disinherit a child is final, your attorney will know the best way to handle it. Consider telling your child that you are disinheriting him or her so it doesn’t come as a complete surprise. Explaining your reasons will allow for honest discussion, may help deter the child from blaming siblings later and may prevent a costly court battle.