What A Special Needs Trust Attorney Can Provide for Your Child | Kam Law Firm (2022)

Introduction

A special needs trust can ensure that your family member with a physical or mental disability is well cared for, even after your death. A special needs trust attorney can help you to provide for your child everything they need.

How Does a Special Needs Trust Work?

A special needs trust is specifically designed to protect someone with a physical or mental disability and to help them retain their access to government benefits such as Supplemental Security Income or SSI and Medicaid.

If your child inherits money from you or has their own estate, they will likely be removed from government benefits as they’ll be considered to have enough money. A special needs trust offers opportunities for your child to retain their government benefits.

A special needs trust sets up a trustee who will manage the funds and can set down specific instructions for how the trust funds will be used over time.

6 Benefits That A Special Needs Trust Attorney Can Provide for Your Child

A special needs trust should be created and written by a special needs trust attorney to ensure that the document is legally binding and covers all of the needs of your child. A special needs trust attorney can provide multiple benefits to your child.

What A Special Needs Trust Attorney Can Provide for Your Child | Kam Law Firm (1)

(Video) Special Needs Trust Advantages | Ettinger Law Firm

1. You Can Use the Funds to Pay for Education, Medical, and Dental Services

A special needs trust is money specifically set aside for someone with a disability. That money is limited to being used for the needs of that individual and as set out by the special needs trust attorney.

In general, special needs trust funds can be used for anything the beneficiary, the person with a disability, needs. This usually includes education, medical, and dental services, among other routine care costs and needs.

2. You Can Also Use the Funds to Pay Anything Not Covered by Government (With Some Limitations)

In addition to paying for the beneficiary’s education, medical, and dental needs, the special needs trust can set aside funds to be used to pay for anything that ends up not being covered by the government.

However, there are some limitations on how the special needs trust funds can be used. A special needs trust attorney will be able to inform you of any specifics you need to avoid paying for, but in general, you cannot use trust funds to pay for, housing or food for the beneficiary.

A special needs trust is typically created to provide for someone with special needs who also received government benefits. Those government benefits are revoked if the beneficiary has a certain level of income. Money paid from the trust for food or housing is considered income for the beneficiary and therefore would disqualify them from receiving government benefits.

Money or cash given directly to the beneficiary, no matter how it is then used, is also considered income and can disqualify someone from receiving government benefits.

(Video) Special Needs Trust Restrictions - What you need to know!

3. With a Special Needs Trust, the Money Will be Safe With Someone You Trust

If you pass your money along to your special needs child in a traditional will or give the money to another child with instructions on how to care for your special needs child, you have no guarantee that they will be cared for in the way you direct.

A special needs trust provides protection for your special needs child and ensures that they are taken care of how you want, even after you’re gone.

4. Your Child With Special Needs Will Still Be Eligible For SSI and Medicaid

One of the most important benefits of a special needs trust is that the funds can be used to care for a special needs child but don’t count as income. If the funds counted as income, your child would probably lose access to government benefits such as SSI and Medicaid.

A special needs trust allows you to use the funds for a special needs child without losing access to SSI, Medicaid, and other government benefits.

5. A Special Needs Trust Attorney Can Help You Update The Document

A special needs trust is a complicated document covering how trust funds are used, by whom, and when. The legal nuances can be confusing to someone who isn’t familiar with the details of a special needs trust. A special needs trust attorney can help you to make sure your special needs trust stays up to date and is updated regularly as the needs of your special needs child change.

6. Planning Ahead With an Experienced Lawyer is The Key to A Successful Special Needs Trust

You don’t want to leave the creation of special needs trust to the last minute or to when you actually need it.

(Video) Does My Child NEED a Special Needs Trust?

Create your special needs trust early so that you have time to make sure everything is correct and is in place prior to when it is necessary. An experienced special needs trust lawyer can help you make sure you’re planning ahead.

Common Questions About Special Needs Trust

Putting together a special needs trust requires examining the situation from all angles. These are some of the common questions I hear from families who are considering a special needs trust.

Are Special Needs Trusts Irrevocable?

Yes. To be most effective, your special needs trust should be irrevocable. This means that no one can dissolve the special needs trust once it has been created.

What Can Be Paid Out of a Special Needs Trust?

A special needs trust can pay for anything that a beneficiary needs, except for food and housing. If the special needs trust provides the beneficiary with cash or pays for food or housing, those payments will be considered income to the beneficiary. If the beneficiary has enough income, they will lose their government benefits such as SSI and Medicaid.

How Are Special Needs Trusts Taxed?

If the special needs trust has any income, especially if that income is higher than $600, you will need to report the income amount and pay tax upon that income. To pay tax for a special needs trust, the trustee will file an original tax return for the trust. The amount of tax paid will depend upon which type of trust you have formed.

What Happens to a Special Needs Trust at Death

A special needs trust is designed to continue without delay even after the death of the grantor or the person who funded the trust. After the death of the beneficiary or special needs child, the special needs trust is dissolved and the leftover funds are dispersed as set out in the provisions of the special needs trust.

(Video) Special Needs Trust | Ettinger Law Firm

How to Start a Special Needs Trust for Your Child

Setting up a special needs trust for your child might seem overwhelming or confusing, but with the help of a special needs attorney, you might be surprised at just how easy it is.

1. Find a Reliable Special Needs Trust Lawyer Near You

The most important step in creating a special needs trust is to hire a reliable special needs lawyer. If you’re in the area, you can hire the best special needs trust attorney in San Diego at the KAM Law Firm. Though there is a cost to hiring a lawyer, the special needs trust attorney fees are worth the cost when you know that your loved one will be properly taken care of in all situations.

2. Decide Who Will Be The Trustee

The second step in creating a special needs trust is deciding who will be the trustee. The trustee is the person who will be in charge of care for the special needs beneficiary and for disbursing funds as necessary. It’s important that the trustee be someone you trust.

3. Identify The Best Type of Special Needs Trust For Your Child

There is more than one type of special needs trust. You need to choose whether a third-party special needs trust, first-party special needs trust, or pooled special needs trustis right for your situation. A special needs trust attorney can help you make that decision.

4. Provide All The Documents to the Special Needs Trust Attorney

The special needs trust attorney will need certain documentation about the lifestyle and medical condition of the special needs beneficiary to help them create the special needs trust.

If you’re considering a special needs trust for your family member, you can get a free consultation with a reliable law firm and a special needs trust attorney at the KAM Law Firm.

(Video) Special Needs Trusts, ABLE Accounts & Powers of Attorneys

FAQs

What is a special needs trust in Washington state? ›

A special needs trust is established to prevent people from losing benefits from certain government programs after receiving a settlement. An influx of wealth can make one ineligible for benefits from Supplementary Security Income (SSI), Veterans Aid and Attendance, Medicaid, and government housing.

How does a special needs trust work in Michigan? ›

Typically, a third party special needs trust is set up by the family of the disabled person. The family then gifts money to the trust, rather than the disabled person, so the gifts do not interfere with the disabled persons Supplemental Security Income (SSI), Medicaid, vocational rehabilitation, and subsidized housing.

How does a special needs trust work in Texas? ›

A special needs trust is a revocable or irrevocable trust established with the assets (income or resources) of a person under age 65 who meets the SSI program's disability criteria. The trust must be established for the person's benefit by a parent, grandparent, legal guardian, a court or the person.

What is a special needs trust in Massachusetts? ›

Special needs trusts are designed to benefit an individual with mental or physical disabilities. Since a trustee has total control over the assets, government program administrators often ignore the funds within these trusts when considering eligibility for certain programs.

Does a trust affect SSI? ›

If an SSI beneficiary receives cash (or a cash equivalent like a gift card) from a trust (or anyone else for that matter), her benefit will be reduced by one dollar for each dollar received, up until the point that she loses SSI completely.

What is a remainder beneficiary of a trust? ›

A remainder beneficiary is a beneficiary of a trust whose benefit vests at a later time. As an example, I may receive income for life and only upon my death what is left of the corpus of the trust goes to my son. I am the income beneficiary and my son is the remainder beneficiary.

What are the disadvantages of a special needs trust? ›

Some of the benefits of utilizing an SNT include asset management and maximizing and maintaining government benefits (including Medicaid and Supplemental Security Income). Some possible negatives of utilizing an SNT include lack of control and difficulty or inability to identify an appropriate Trustee.

How does a trust fund work for a disabled person? ›

A trust is a formal legal arrangement. You can choose between 2 and 4 people as trustees to manage the money you have left your child according to your wishes. Some families leave money to a relative on the understanding that they will look after the disabled person.

How do I open a able account in Michigan? ›

Michigan
  1. Program Name: MiABLE (click to open an account) Phone: (844) 656-7225.
  2. Status: Open for Enrollment.
  3. State Program Manager: TSA Consulting Group, Inc.
  4. State Account Limit: $500,000.
  5. Accepts Out Of State Residents: Yes.
  6. Annual Contribution Limit: 16,000.

What is a pooled trust in Massachusetts? ›

To qualify for MassHealth, an individual 65 and over must have assets below $2,000. A pooled trust provides a source of funds to pay for items and services not covered by MassHealth, which are necessary for disabled seniors to live independently in the community.

How does a trust fund work in Texas? ›

A Texas living trust is set up by the settlor, the person who places the assets in trust. The goal is generally to place as many assets into the trust as possible. Some assets, such as retirement accounts and life insurance cannot be transferred. The assets in the trust are managed for your benefit while you are alive.

What is a Miller trust in Texas? ›

A Qualifying Income Trust (QIT) also referred to as Miller Trust, is a trust that allows the beneficiary to control the amount of income that is used to determine Medicaid eligibility. A qualified income trust in Texas helps people qualify for Medicaid but it doesn't shelter income.

What is an exempt trust in Texas? ›

An exemption trust is a trust designed to drastically reduce or eliminate federal estate taxes for a married couple's estate. This type of estate plan is established as an irrevocable trust that will hold the assets of the first member of the couple to die.

What happens if you inherit money while on disability? ›

Will inheritance affect my SSDI benefits? If you are a Social Security Disability Insurance (SSDI) recipient and receive an inheritance, it will not affect your benefits. SSDI is not a needs-based program and is not contingent upon your unearned income—including inheritance.

Do you have to report inheritance to Social Security disability? ›

Even if you do not intend to accept the inheritance, you must tell SSA that you are the beneficiary of one. Failure to report an inheritance, regardless of whether you accept it, can result in financial penalties of $25 to $100 for each failure or late report.

Who has more right a trustee or the beneficiary? ›

And although a beneficiary generally has very little control over the trust's management, they are entitled to receive what the trust allocates to them. In general, a trustee has extensive powers when it comes to overseeing the trust.

What a trustee Cannot do? ›

A trustee cannot favor one beneficiary over another. The trustee must also act impartially in investing and managing trust property, while at the same time considering the differing interests of the beneficiaries.

Can a trustee withhold money from a beneficiary? ›

Yes, a trustee can refuse to pay a beneficiary if the trust allows them to do so. Whether a trustee can refuse to pay a beneficiary depends on how the trust document is written. Trustees are legally obligated to comply with the terms of the trust when distributing assets.

Can a beneficiary withdraw money from a trust? ›

Generally, a trustee is the only person allowed to withdraw money from an irrevocable trust. But just as we mentioned earlier, the trustee must follow the rules of the legal document and can only take out income or principal when it's in the best interest of the trust.

What is a d4 trust? ›

Individual (d)(4)(A) Trust Administration Services

Funds in a d4A trust are individually managed and invested. For d4A trusts a beneficiary must be under the age of 65 at the time the trust is established and Medicaid must be paid back for their services at the time of the beneficiary's passing.

What is a disabled trust? ›

A Disabled Person's Trust can be a way of ring-fencing assets for the beneficiary so that their means-tested benefits are not affected. A Trust can protect a disabled person who could otherwise be vulnerable to financial abuse or exploitation from others.

What is a special trust? ›

Special Trust Type A – a trust created solely for the benefit of a person(s) with a mental or physical “disability” as defined in section 6B(1) .

How do trust funds pay out? ›

The grantor can set up the trust, so the money distributes directly to the beneficiaries free and clear of limitations. The trustee can transfer real estate to the beneficiary by having a new deed written up or selling the property and giving them the money, writing them a check or giving them cash.

Does money held in trust affect benefits? ›

The trust is a formal legal arrangement whereby trustees hold money on behalf of the beneficiaries, in accordance with the terms of your will. The money is protected and if the right kind of trust is used, it will not affect any means-tested benefits.

What are the 3 types of trust? ›

With that said, revocable trusts, irrevocable trusts, and asset protection trusts are among some of the most common types to consider. Not only that, but these trusts offer long-term benefits that can strengthen your estate plan and successfully protect your assets.

Can someone on SSI have a savings account? ›

Yes. If you receive Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) you can have a savings account.

What is the difference between SSI and SSDI? ›

The major difference is that SSI determination is based on age/disability and limited income and resources, whereas SSDI determination is based on disability and work credits. In addition, in most states, an SSI recipient will automatically qualify for health care coverage through Medicaid.

Do ABLE accounts have debit cards? ›

ABLE debit card allows easy access to your ABLE checking account. Use the debit card to pay qualified ABLE expenses such as education, health and wellness, housing, transportation, and more.

Can a trust be a disabled beneficiary? ›

Using a will trust can help you to look after a disabled relative in the future so that it does not affect their benefits. If your loved one is vulnerable or lacks capacity, a will trust can also help: protect them from the risk of financial abuse. support them if they need someone to manage their money.

Does Bank of America offer trust accounts? ›

Bank of America

Bank of America is a leading national bank that offers trust accounts through their private banking firm. The minimum investment required is negotiable, and they offer a range of trust types, including revocable, irrevocable, personal, and charitable trusts.

How are special disability trusts taxed? ›

The tax rules for special disability trusts are designed so that the net income of the trust is taxed at the principal beneficiary's marginal tax rate, rather than some or all of it being assessed to the trustee at the rates applicable under section 99A.

Do disabled people pay inheritance tax? ›

As long as a trust does meet the necessary conditions, the assets of the disabled person's trust are treated for inheritance tax purposes as though the beneficiary owns the assets directly. This means that the inheritance tax rules for trusts do not apply.

Does money held in trust affect benefits? ›

The trust is a formal legal arrangement whereby trustees hold money on behalf of the beneficiaries, in accordance with the terms of your will. The money is protected and if the right kind of trust is used, it will not affect any means-tested benefits.

What expenses can be paid from a trust? ›

Most expenses that a fiduciary incurs in the administration of the estate or trust are properly payable from the decedent's assets. These include funeral expenses, appraisal fees, attorney's and accountant's fees, and insurance premiums.

Which bank is best for trust? ›

Below are the top 5 banks that allow you to open trust accounts.
  • Ally.
  • Wells Fargo.
  • Alliant Credit Union.
  • Bank of America.
  • LendingClub.

How do trusts pay out? ›

The grantor can set up the trust, so the money distributes directly to the beneficiaries free and clear of limitations. The trustee can transfer real estate to the beneficiary by having a new deed written up or selling the property and giving them the money, writing them a check or giving them cash.

Videos

1. Special Needs Trust Gone Wrong!
(Ellen Cookman - Special Needs Trust Attorney)
2. How do I get a special needs trust in my will for the benefit of a disabled person?
(Salines-Mondello Law Firm, PC)
3. How To HIRE a SPECIAL NEEDS Attorney
(Ellen Cookman - Special Needs Trust Attorney)
4. Why Do I Need a Special Needs Attorney AND a Special Needs Financial Planner?
(Consolidated Planning Group)
5. Using a Special Needs Trust for your child who is on SSI or Medicaid.
(LawTube)
6. Protecting Your Child with Special Needs (the Supplemental Needs Trust)
(Russo Law Group, P.C.)

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