Father with his special needs son

How Can I Fund a Special Needs Trust for My Loved One?

If you have a loved one with special needs you likely spend a lot of time just trying to get through the next day. The next doctor’s appointment. The next year. Thinking much further ahead is overwhelming. 

But assessing your loved one’s long-term needs is something you must do if he or she will never be self-supporting, and will someday be forced to live without you. One way to ease your anxiety about this more distant future is by setting up a special needs trust. 

At Palmer & Slay PLLC, we help people in the Brandon, Mississippi area create and figure out how to fund special needs trusts (SNTs) that will enrich the lives of their loved ones without threatening their eligibility for government benefits like Supplemental Security Income (SSI), Medicaid, Section 8 Housing, or food stamps.

Finding the Funding for a Special Needs Trust 

Setting realistic expectations about the sort of care your loved one will need in the future, and estimating how much those services will cost is one of the first steps you must take when setting up a special needs trust. The second step is figuring out how to pull that kind of money together. There are a few sources most families in the Brandon, Mississippi area turn to:

  • Personal Injury Settlements – If your loved one’s injuries were caused by a third party who has since been forced to pay restitution, that money may be placed into an SNT to protect it. Depending on how the SNT is structured, the trustee can be given the authority to invest and grow the funds. 
  • Insurance – If your loved one will not necessarily need a lot of additional support until after you or another family member has passed away, life insurance can be a cost-effective way to fund an SNT. 
  • Gifts, Inheritances, Go-Fund-Me’s – If others are chipping in funds to benefit your loved one, putting that money into a SNT instead of a traditional bank account will prevent these thoughtful gifts from becoming a burden. Too often those who are trying to do good by giving money to someone with special needs end up impacting the recipient’s eligibility for benefits. Putting that money into a SNT can protect it, and protect your loved one’s government benefits. 
  • Real Estate – If you have modified your family home to accommodate your loved one, it may make sense to ensure he or she can live there even after you are gone. But transferring ownership directly to your loved one can be a big mistake. With housing prices in the Jackson metro area skyrocketing, owning even a modest home can make your loved one ineligible for government benefits. Putting the home in trust is often a better option. While in trust, trust funds can be used for maintenance and taxes, and the home can be rented out or sold if no longer needed as a residence. 

Different Funding, Different Types of Trusts

The type of funds you plan to use to fund a special needs trust will dictate what sort of SNT you can establish. There are two main types of SNTs: first-party and third-party trusts.

  • First-Party Trusts – First-party trusts are created with the disabled individual’s assets, such as an inheritance or a legal settlement. These trusts are subject to payback provisions, requiring any funds remaining after your loved one’s death be used to reimburse the government for benefits it provided. 
  • Third-Party Trusts – Established by family members or friends for the benefit of the person with special needs, these trusts do not have payback provisions. This means any assets remaining in the trust after your loved one’s death may be distributed to other family members or charities.

Preserving Your Wealth. Protecting Your Loved Ones. 

Planning ahead can be particularly challenging if you have a loved one with special needs, but the Palmer & Slay PLLC team is ready to help you find a path forward. Please contact us today to discuss the benefits of special needs trusts and figure out how to fund one without impacting your loved one’s eligibility for government assistance.