Creating a special needs trust can be beneficial if you currently provide care for a child or loved one with special needs. Providing long-term care for a loved one with mental or physical disabilities is an important estate planning priority. A special needs trust allows your loved one to remain eligible for important benefits while using trust assets to improve their lives.
Contact an Experienced Special Needs Trust Attorney
The experienced estate planning attorneys at Palmer & Slay, PLLC, can help you establish a special needs trust as part of your comprehensive estate plan. Our attorneys have an in-depth understanding of the specific statutes and rules that govern special needs trusts. When you work with us, you can have peace of mind that your loved one will be cared for after your death. Contact Palmer & Slay, PLLC, to schedule an initial consultation. We will carefully review your goals, answer your questions, and work with you to create trust for your loved one with special needs.
What Is a Special Needs Trust?
Special needs trusts are intended to supplement, not replace, the primary support individuals with special needs require. The person who creates the trust is called the grantor. The grantor selects one or more trustees who manage the assets in a special needs trust for the benefit of the individual with special needs. The individual with special needs is the trust beneficiary. The assets in the trust cannot be distributed directly to the disabled individual. Instead, it should be disbursed to a guardian or trustee who provides goods and services for the use and enjoyment of the individual with special needs.
The trust agreement creates trust and provides specific information on what activities, programs, and other expenditures the trust covers. The trust can pay for anything the trust agreement provides, including luxuries and comforts that public assistance funds won’t cover. Sometimes special needs trusts are called “parent’s pocket” trusts because they pay for the kind of things that a parent would reach into his or her pocket to cover for his or her child. These trusts pay for amenities beyond the bare necessities of life, such as recreation, counseling, medical attention, and education.
The Benefits of Creating a Special Needs Trust
When a parent provides for a child with special needs in his or her will, the child may lose eligibility for important government assistance programs. For example, suppose a parent creates a will in which he gives all his assets and property to his adult child with special needs. When the adult child inherits the property, he could become ineligible for medical insurance through Medicaid and important monthly Social Security benefits. These benefits programs are only eligible for individuals with minimal income and little to no assets.
Unfortunately, these government programs don’t provide all the financial support an individual needs to live a full and happy life. The main benefit of creating a special needs trust is allowing your loved one the financial support he or she needs to supplement the benefits he or she is already receiving. When you use a special needs trust tailored to comply with Mississippi trust law, your loved one will not become ineligible for these important benefits. The funds in the trust can be used for your loved one’s needs beyond food, shelter, clothing, and medical care.
Special Needs Trusts Provide Supplemental Income
A Mississippi special needs trust can be used for various life-enhancing purposes. Your loved one will be able to use the funds in the trust on the following services:
- Annual check-ups at independent medical facilities
- Supplemental tutoring or education
- Transportation to and from religious services
- General transportation, including the purchase of a vehicle
- Maintenance of vehicles
- Funds for vacations or trips
- Purchase of materials for a hobby
- Recreational activities
- Purchase of goods that add to the quality of life, such as videos, computers, furniture, or electronics
- Funds for entertainment, such as sports games, shows, and movies
- Athletic training or competitions
- Special dietary needs
- Personal care attendant
First-Party and Third-Party Trusts
Most special needs trusts are called third-party special needs trusts. Parents transfer assets into the trust through their estate plan. Friends, family members, and grandparents can also transfer property into the trust. Everyone abides by the trust agreement requirements. The trustees should avoid using trust funds for anything that could make individuals ineligible for public benefits.
First-party trusts are created when an individual with special needs already has his or her assets or will inherit assets. For example, suppose an individual was seriously injured in a car accident and obtained a significant settlement through a personal injury claim. The individual creates the first-party trust and transfers the assets from the settlement into the trust. First-party trust can also be funded from assets from the individual’s retirement plan, a divorce settlement, an inheritance, or a life insurance policy.
Appointing a Trustee
Appointing a trustee is an important step in creating a special needs trust. The trustee has a legal obligation to manage the property in the trust effectively to benefit your loved one with special needs. Some of our clients choose to appoint a trust management company to manage the trust. Others appoint a special needs nonprofit to act as the trustee. We recommend selecting a trustee who will work diligently to ensure that the trust management needs all state and federal guidelines, so your loved one remains qualified for public benefits.
Reach Out to a Special Needs Trust Attorney
These trusts are an important component of estate planning for those with disabled beneficiaries. Creating a special needs trust can allow your surviving loved one to retain eligibility for government benefits while providing funds for activities and services that contribute to their quality of life. The experienced attorneys at Palmer & Slay, PLLC, can help you create a trust as part of a comprehensive estate plan. Contact Palmer & Slay, PLLC, today to schedule an initial consultation and learn more.