Tzvi Schectman
Sponsored
Special Needs Trust
According to the U.S. Census Bureau, about 57 million Americans are living with a disability and about two-thirds of these individuals are living with a severe disability.1 For some individuals, the disability may be caused by a sudden, life-altering accident. For others, the condition may arise at birth or result from a chronic illness. Whatever the origin, severe disabilities almost always create a significant financial burden due to curtailed earning power and ongoing expenses.Finding the resources for ongoing support
If disability results from an accident, it is important that any court award or out-of-court settlement be structured and managed prudently so that the person living with a disability can maintain his or her quality of life. If family wealth or a life insurance policy will be used to fund the ongoing care of a person living with a disability, it is equally important that these resources be handled carefully to help achieve the donor’s intent. Making prudent decisions for a person living with a disability may make the difference between a life of dependence and anxiety or a life of fulfillment and dignity.The Special Needs Trust—a tailored solution
A Special Needs Trust is a legal entity used to set aside money or property for the benefit of a child or adult living with a disability. A key feature of a Special Needs Trust is that it is intended to preserve the beneficiary’s eligibility for public benefits such as Supplemental Security Income and Medicaid. Under Federal law, funds held within a Special Needs Trust are not considered available to the beneficiary for purpose of benefits qualification. Special Needs Trusts help meet the needs of people living with a disability and their families in three primary ways:- Preserves government benefits. People living with disabilities may become ineligible for state and Federal benefits if their income and/or resources (e.g. savings or checking account) exceed certain thresholds. The primary purpose of the public benefit programs is to cover the beneficiary’s basic needs including food, shelter and medical care. Special Needs Trust assets may only be used to supplement the government programs available to each beneficiary and to provide disbursements that enhance the beneficiary’s quality of life. For this reason, it is important that settlement proceeds, or assets in a testamentary trust, be placed in a Special Needs Trust, since a Special Needs Trust protects the beneficiary’s eligibility for benefits and helps to maintain his or her quality of life.
- Meets long-term cash flow needs. Assets in a Special Needs Trust are managed by a trustee, or by professional investment advisors whom the trustee selects. It is important to have experienced professionals make investment decisions because they can structure trust assets to help prevent distributions from depleting the trust prematurely. A Special Needs Trust can provide funds for the beneficiary’s current needs while generating sufficient growth to sustain the portfolio’s purchasing power in the future.
- Enhances quality of life. A Special Needs Trust can provide financial support for a wide range of quality-of-life activities and services, including education, recreation, custom living arrangements, social services and companionship. In many cases, trust income may also be used to pay for new, promising medical treatments that are not typically covered by government benefits. For a person living with a disability, supplemental services like these are essential and provide the basis for a meaningful life and a sense of optimism about the future.
