As you get older, you may find that your adult child who is disabled or unable to work and receives SSI or Medicaid benefits may never be able to care for himself or herself. A concerned parent should be aware that there are ways to protect that disabled child throughout their life and not jeopardize the child’s government benefits. The best way is to create a SPECIAL NEEDS TRUST.

A Special Needs Trust (SNT) can be created with the child’s own money, such as an inheritance, insurance payment or a personal injury settlement, or someone else’s money. This trust created with the individual’s own funds is more expensive because it must be approved by the court. The easiest and least expensive SNT to do is when a parent, grandparent, or other third party pays the trust and contributes a sum of money for the benefit of the disabled person, who is known as the beneficiary.

One of my clients had a brother who, at age 45, was unable to keep a job due to severe COPD. The brother received SSI and Medi-Cal, but had very little money for anything beyond basic needs. The sister wanted to contribute $ 100,000 for her brother’s lifelong special needs. She paid off the trust and appointed her other brother as trustee. The trustee opened a bank account in the trust’s name and used the funds to pay for the needs of the disabled brother, beyond his room and board, which are the only things covered by government benefits.

WHAT ARE THE ADVANTAGES OF A SPECIAL NEEDS TRUST?

An SNT ensures that a disabled person with assets greater than $ 2,000 will still qualify for SSI, Medi-Cal, and other government assistance necessary for their health and well-being.

· An SNT gives parents the peace of mind of knowing that their disabled child will be cared for when they are no longer physically able to provide care.

WHAT ARE THE DISADVANTAGES OF A SPECIAL NEEDS TRUST?

A diligent trustee must be appointed who must handle all the money in the trust. The administrator’s job can last for a long time, throughout the life of the disabled person.

The beneficiary may never receive cash from the trust, only items for their special needs, such as medical and dental expenses, medical equipment, training and education, insurance, transportation, entertainment, including vacations, cars, real estate, modifications to accommodate disability and other elements to improve the quality of life. The trustee pays everything and the beneficiary receives what the trust paid for.

Most people with disabilities want to manage their own money and must be convinced that this would disqualify them from receiving government benefits.

Special care should be taken with distributions if the beneficiary is in Section 8 housing.

If you have a child who will need outside assistance for the rest of his life, consult an attorney sooner rather than later to discuss the possibilities of establishing a Special Needs Trust. You will sleep much better once the action is done.