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My child has special needs. What can I do to ensure that he is cared for?

Posted by Zinner & Co. Tax Team on Jul 11, 2019 6:59:00 AM
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One of the challenges when providing for loved ones with special needs is to do so in a way that they do not lose their eligibility for governmental assistance such Supplemental Security Income (SSI) or Medicaid. Recipients can lose eligibility for these programs if their assets exceed a certain level. One of the ways around this is to create a trust.There are multiple types of trusts, and the appropriate solution is dependent on your special needs trustssituation. For example, if your child was injured in an automobile accident, received a large insurance settlement from an insurance company and now requires special care, their insurance settlement could quickly be depleted if they do not receive SSI or Medicaid.

Here are a few types of trusts to consider:

Discretionary Special Needs Trust
    • Created by a 3rd party to benefit an individual.
    • The funds are managed by a 3rd party (trustee) who has discretion on how funds are spent.
    • Funds do not have to be paid back to the state at the time of the disabled person’s death and can go to other heirs.
    • There is no age or funding limit.
Supplemental Services Trust
    • Funds belong to the 3rd party.
    • Beneficiary must qualify as disabled through the State Department of Disabilities or County Board of Developmental Disabilities.
    • There is a maximum contribution amount.
    • Funds can only be used for supplemental services.
    • At the beneficiary’s death, 50% of remaining funds must be paid back to the state.
Special Needs Trust
    • Funds belong to a 3rd party or beneficiary
    • Created by parent, guardian, or court.
    • Created so the beneficiary can continue to receive governmental benefits.
    • Trust must include a payback provision, so at the time of the beneficiary’s death, the costs of all medical assistance paid by the state are reimbursed.
    • Funds can only be used to pay for care items and services not covered by public benefits.
Pooled Trust
    • Funds belong to a 3rd party.
    • Designed for small asset accounts.
    • Created by parent, grandparent, guardian or court.
    • Funds are administered by a not-for-profit organization under Section (501)(c)(3)).
    • No age limit.
    • At the beneficiary’s death, 100% of remaining balance goes to charity.

Which type of trust is appropriate for your loved one? Contact a Zinner trust expert today to find out.


Topics: social security, Estates, Gifts & Trusts


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