Special Needs Trust Lawyers
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What is a Special Needs Trust?
A special needs trust allows a person to create a trust for a disabled child without defeating their eligibility for government benefits. Normally when a person who is receiving government benefits such as social security or Medicaid, the receipt of gifts or an inheritance can reduce or completely eliminate their eligibility for these programs.
Basically, a special needs trust, or “supplemental needs trust” allows a parent or guardian to set aside property for the benefit of their disabled child after the parent has become deceased or disabled. They are also commonly used to distribute inheritances or even proceeds from a personal injury settlement on behalf of the disabled person. The funds can sometimes be founded on proceeds issuing from compensation for litigation, insurance settlements, or criminal injuries.
What are the Requirements for Special Needs Trust documents?
Special needs trusts provide additional benefits or luxuries for the child that would not otherwise be available using other types of trusts. However, like any trust, special needs trusts must follow the requirements of trust laws in order to be valid.
Trust laws may vary be state, but a special needs trust document should include the following features to be legally enforceable:
- The document should be titled “Irrevocable Special Needs Trust” or “Supplemental Needs Trust”
- It should include your child’s legal name
- The language in the document should make it impossible for your disabled child to demand a different distribution of the trust funds (i.e., it should only be made for the purpose of benefiting your child and not others)
- The trustee appointed in the document must have full discretion to manage and spend the trust assets according to the trust purpose
- The trust is to be administered in a way that does not jeopardize the child’s eligibility for government benefits or assistance
- Must specify that the trust is not intended to be simply a support trust, but that the funds are intended solely for the purpose of supplementing government benefits
Special needs trusts may be funded through various sources, such as a will, gifts from friends or relatives that are deposited directly into the trust, or through “survivorship” life insurance policies. However, the most important thing to remember is that the funds should not interfere with the disabled person’s right to participate in government benefit programs.
If you have questions regarding setting up a special needs trust, it may be necessary to consult with a lawyer for advice on drafting the documents. Alternatively, a special needs trust can often be established through the guidance of a structured settlement planner.
What is a “Letter of Intent” for a Special Needs Trust?
You may wish to supplement your special needs trust document with a “letter of intent” which further defines your intentions regarding the use of the trust funds. A letter of intent provides further information about your child to family members, relatives, and other persons who may be involved with the child.
You may choose to include the following information in your letter of intent:
- Your child’s biological and biographical profile
- Financial instructions
- Medical history and any special considerations
- Important social contacts
- The child’s personality disposition, skills, hobbies, and abilities
- Your child’s various goals and aspirations
A letter of intent can include any other information that you might feel is relevant. Such a letter can help prevent any future misunderstandings regarding the trust.
Do I Need a Lawyer for a Special Needs Trust?
Special needs or supplemental trusts can be very powerful tools to secure your child’s future. However, special needs trusts are very unique trusts that apply only under very specific circumstances. You may wish to hire a trusts lawyer to assist you in planning, drafting, and reviewing the trust documents and letter of intent. Working with an experienced attorney can ensure that the trust is legally enforceable and reflects the special needs and desires of your child.
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Last Modified: 09-21-2015 02:18 PM PDT
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