Kerrison Schmutz Miller
Special Needs Trusts – Their Purpose and Benefits
Setting up a Special Needs Trust is a great way to help someone with an intellectual disability have access to funding without losing Social Security, Medicaid, or Medicare benefits. Special Needs Trusts protect individuals with disabilities and assure that the funds are properly managed. The party creating the Special Needs Trust designates a trustee to oversee the disbursement of funds, communicate with the beneficiary, report taxes, and invest trust assets. The trustee has a duty to always act in the best interest of the disabled individual. Special Needs Trust funds cannot be used for food or shelter; however, they can be used for medical expenses, payments for caretakers, and transportation costs. The funds can also be used on education, vacations, and recreation without affecting public assistance.
Additionally, Special Needs Trusts are irrevocable trusts, meaning the funds meant for the beneficiary are safe from creditors and legal judgment and are only available for the beneficiary of the trust. This adds reassurance for family members and loved ones because no one can seize the money – the funds will be always available to care for the needs of the disabled individual. There are two types of Special Needs Trusts: Self-Settled Special Needs Trusts and Third- Party Special Needs Trusts.
Self-Settled Special Needs Trusts are funded by the individual’s own funds. Here at Thomason and Pracht, LLP, we set up Self-Settled Special Needs Trusts for clients that acquire traumatic brain injuries and/or debilitating disabilities resulting from motor vehicle accidents, slip and fall injuries, and other incidents that lead to personal injury with the funds received from a settlement or court verdict.
Third- Party Special Needs Trusts are funded by a third party and must be funded before the disabled beneficiary turns 65. Third Party Special Needs Trusts are a great option for parents wanting to make sure their disabled children are financially cared for during the lifetime of the parents, as well as after the parents are gone, without losing public assistance payments.
Fortunately, there are options available for those with disabled loved ones ensuring that they will be both cared for as well as protected after a settlement or death of a parent/caregiver. They can rest assured that the assets will be used as intended. The lawyers at Thomason and Pracht, LLP are familiar with Special Needs Trusts and can help you or a loved one determine the best way to protect and care for a person with special needs. Please do not hesitate to call us at 864-226-7222 for a consultation.