Special needs trusts are made specifically for the benefit of disabled or mentally ill beneficiaries. These beneficiaries lack the mental capacity to manage their own finances. The trust is created with the specific needs, lifestyle, and future of the beneficiary in mind. Special needs trusts are often used to ensure that the beneficiaries don't lose government benefits they are receiving. The trustees of special needs trusts can be family members but sometimes a third party will be appointed by the court. The right trustee is very important and must be done very carefully, especially for special needs trusts that are used for the benefit of a younger person or if getting government benefits.
More often than not, people with disabilities qualify for government assistance such as Supplemental Security Income (SSI), Medicaid, vocational rehabilitation, subsidized housing and other benefits. It is a mistake to leave assets to their disabled loved ones through a will and unfortunately many people do so. Acquiring a lump sum of money will be problematic because it can disqualify your loved one for these types of government assistance programs. Instead of using a will you can set up a special needs trust which will avoid these issues. Since the trustee has control over the management of the funds and assets, and not the beneficiary, government program administrators ignore the trust assets when considering eligibility.
Special needs trusts can also be used to set up inheritance funds or proceeds from a settlement on behalf of the disabled person. This way, if your loved one is the plaintiff in a successful lawsuit or inherits assets, those funds will go into the trust and will not disqualify him or her from receiving those government benefits. On the flip side, if the beneficiary is ever sued, the funds in his or her special needs trust cannot be touched--they are not subject to any judgment.
If you need help understanding what a special needs trust is, contact our law group for excellent guidance. We will show you how to set up a special needs trust and make sure that your loved one’s financial rights are protected. Our special needs trust attorneys will explain the details and make sure that you have a clear idea of how the process works. If you want to protect your financial future, call us for help setting up a special needs trusts.