When their child has a disability, parents want to provide them with the proper assets necessary to protect their future. A Special Needs Trust, often referred to as a Supplemental Needs Trust (SNTs), is a legal tool that allows an individual appointed by the family to be responsible for managing money and making decisions for their child should they be unable to do so.
Additionally, a Special Needs Trust is intended to ensure that there are enough financial resources for the long-term care needs of the child. However, this must be done in such a way so as not to risk the child’s eligibility for governmental assistance. A Special Needs Trust is very important as governmental benefits such as Medicaid and Social Security will likely be unable to meet the financial needs of your child for the remainder of his or her life.
In response to this potential shortage in finances many parents plan to leave their child with a large sum of money when they pass someday. However, this plan could backfire, as it could inadvertently make them ineligible for benefits that can truly help them.
Again, this is why a Special Needs Trust can be extremely beneficial. Not only can you leave assets to your child but also you won’t undermine their eligibility for benefits. However, in order for this to work properly, you must ensure that the trust is set up correctly.
When you create a Special Needs Trust it is important that you avoid making certain mistakes, which could negatively impact your child. Here are three mistakes to avoid.
When your child with special needs is young, you may think that you have plenty of time to plan for their future. However, while that may be true, it may also prove false. Unfortunately, we never know when we will become incapacitated or pass away. Additionally, by setting up the trust while your child is still young, you can ensure that others who choose to make contributions to him or her over the years will do so in a manner that does not interfere with their right to governmental benefits.
2. Trying to simply DIY
While Special Needs Trusts can be extremely beneficial, this is only the case if they are set up in the proper manner. This is why an attorney who specializes in this area of law should establish Special Needs Trusts. Since the law varies state-to-state, using the Internet to understand the related rules can be detrimental. These documents are often quite complex so it’s better to get them right the first time rather than spend unnecessary time and money over time or to risk them being ineffective.
3. Not speaking with Trustees on duties and expectations
It’s a lot of responsibility for anyone you choose to be Trustee of your child’s Special Needs Trust. That’s why before you make that decision you should speak with that person about your expectations when you are no longer able to manage the trust funds. You may even want to bring the person you are thinking of to meet with your special needs/estate-planning attorney so that he or she can better understand the associated responsibilities. One of the major issues with a family member Trustee for an SNT is alluded to above. The family member may be very well-intentioned but accidentally or otherwise create a problem with government benefits in making a distribution to the beneficiary that runs afoul of the law or regulations then in effect. For that reason, or just to have a long-term solution you may also want to consider using a professional Trustee for the SNT. One option in that regard is to use a Pooled Special Needs Trust operated by an organization that specializes in this type of Trust. We work with several such organizations and our clients who use them are very happy that they did.
4. Failing to Update the Trust as Needed
While Special Needs Trusts are designed to help fit the specific needs of a child with a disability, sometimes those needs can change over time. That’s why it’s also really important that you look over and update the trust at least every few years in order to make sure that it is still accurate and applies correctly to your child at this point in his or her life.
Although we wish we could, we can’t always be around for our children. A Special Needs Trust is designed to provide support and protection for a child with special needs. By working with a knowledgeable and experienced estate planning attorney you can avoid making the above mistakes and take comfort that your trust will be properly established to secure your child with a safe future.
Reilly Law PLC Helps Those in Virginia Who Are in Need of a Special Needs Trust
When it comes to preparing legal documents for individuals with special needs, the attorneys at Reilly Law understand the importance of protecting your wishes and affording you peace of mind. We will help you to create a Special Needs Trust as part of your comprehensive estate plan that meets your wishes and makes the lives of your loved ones easier. To learn more or to schedule a free consultation, contact us today!