Special Needs Trusts (SNT)
Working with families that have a need for this type of planning has been and continues to be a focus of our practice. It is estimated that over 10 million families are currently affected by someone with a disability.
The disabled family member may be a minor child, an adult child, a brother or sister, or parents and grandparents.
The disability takes many different forms.
It may be an issue the child has struggled with since birth, something that developed later in life, or complications sustained after the child has reached adulthood from an automobile accident or other injury.
We know that each disabled person has different capabilities and needs.
That is why we take the extra time to analyze your loved one’s situation so we can craft a plan to give you the peace of mind you deserve in knowing that you have taken the appropriate steps to not
only plan for the special needs person in your life, but to also create a workable plan that will benefit your other heirs.
A special needs trust is a technique that must be utilized properly when planning for a minor child. The trust must be drafted and implemented so that it does not affect eligibility for various governmental benefits such as Medicaid and Social Security. Many parents or grandparents of a special needs child feel that they are only left with two options: Disinherit the child so they keep government benefits or give the disabled child’s share to a family member with an understanding it is to be used for the care of the special needs child. Utilizing a properly drafted trust is a much better solution. A properly drafted special needs trust should provide the peace of mind that the child will remain eligible for benefits.
Unfortunately, a plan to disinherit this child usually does more harm than good. By disinheriting the child, the child will still maintain the threshold to receive governmental benefits, but at what cost? The governmental benefits, in most cases provide for very few if any extras over and above the cost of the child’s medical needs and care. There are techniques available for the parent to still include the special needs child in the distribution of their assets while keeping them eligible for benefits. A Special Needs Trust that we draft is designed to supplement government benefits, not to supplant the benefits. Therefore, the child is still receiving government care, while the trustee can use the assets placed in trust for “extras” that the child may need and that are not covered by the benefits.
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The second option, of setting aside some assets with an “understanding” among family members that the money is to be used to provide for the Special Needs child is a poor planning method. So many times, we have seen families where no one thought there would be problems among the heirs, but instead, the heirs wind up not speaking to each other, argue over the smallest items, or sue each other. Events like this are not uncommon once the parents are deceased. In situations like this, the Special Needs child cannot normally stand up to protect his or her interests and may become the victim of siblings’ disagreements. Therefore, a Special Needs Trust is one solution to ensure that assets get to the child that needs them the most. An SNT prevents the family members from “forgetting” what the understanding was while ensuring the child continues to receive benefits.
Some clients, after drafting an SNT, prefer to have a corporate or professional trustee serve as opposed to a family member because they feel that this type of trustee will make sure benefits from the trust flow directly to the child in a timely and legal manner. In addition, it is sometimes unpleasant for one sibling to have power and control over another sibling. However, it is our experience that some families have difficulty finding a corporate or bank trustee to administer these types of trusts. The primary reason is that larger corporate or bank trustees nationwide usually require a minimum of $500,000 in assets before they will administer the trust.
Furthermore, an SNT trust can deplete the funds available very quickly, thus even if the SNT had over $500,000, the value could be well below that amount very shortly. If that is the case the bank may not want to take on the duties. Furthermore, the corporate or bank trustee must be well versed in the regulations and requirements needed to keep the child eligible for benefits.
Since we know this is an issue that is encountered by many families, we offer to act as Trustee for many of these trusts. Since we have worked with you in drafting the documents and achieving your goals, we have a very good idea of what your plan is for the assets and how you want them to benefit the child. Therefore, we feel that we can give more time, attention, and make correct and informed fiduciary decisions that result in the greatest impact on the life of the child. However, you are certainly not under any requirement or obligation to have us serve as the trustee, and are free to select and we encourage you to select whomever you believe would best serve the needs of your child while maintaining eligibility for benefits.
Our firm has planned for numerous transfers to special needs clients and we would be happy to discuss your situation and create a plan that is right for you.
Larson and Brown has over 34 years of estate planning legal experience, but we do much more than simply practice law. We are personally invested in our community and work hard to meet the needs of individuals who seek our help. That’s why we build great relationships with our clients by providing valuable information, guidance, and support for current concerns, as well as long term planning.
We care. We listen. We counsel.
To set up a consultation and find out more about creating a legacy for your loved ones, call
(316) 729-0100 or use the follow the button below and send us an email. We look forward to working with you.