Planning, drafting, and administering a Special Needs Trust is a complex process. However, this type of Trust ensures that the disabled child or adult maintains their eligibility for government assistance to cover their medical and daily living expenses. Similar to drafting a Will, it’s essential that you include all the necessary clauses and legal terminology to ensure that it’s upheld in court.
At Auld Brothers Law Group, we have a knowledgeable team that can help you plan, draft, and administer a Special Needs Trust. Continue reading to learn the difference between a Special Needs Trust for a child and an adult.
Special Needs Trust: Planning, Drafting, and Administration – What You Should Know About This Book
Before we begin the article, we need to address a book sold online that educates the reader about Special Needs Trust issues (Special Needs Trusts: Planning, Drafting, and Administration — Two Volumes Loose Leaf – Unabridged). It’s a compilation of public benefits laws affecting persons with disabilities from multiple contributors.
Although this book may provide some helpful information, every state has its own laws for administering a Special Needs Trust. As a result, this book could cause some confusion if you’re not well-versed in the legal requirements of your state.
Why Should a Child or Adult Have a Special Needs Trust?
In Pennsylvania, if a special needs child or adult has $2,000 or more in assets, they are no longer eligible for Pennsylvania public benefits. These benefits can include Medical Assistance, Medicaid Waivers and Supplemental Security Income (SSI), Social Security Disability, etc. A Special Needs Trust in Pennsylvania allows special needs children and adults to receive eligibility for government assistance even if their assets exceed $2,000.
Before assuming that someone might not need a Special Needs Trust, make sure to consider if the disabled person could receive potential inheritances or settlements that could put their assets over the $2,000 total during their lifetime. Additionally, this Trust also helps protect the person from being taken advantage of with their finances since it gives someone else control over their finances. Also, if the person is ever sued over a personal injury claim, the judgment creditor cannot seize the assets in the Trust.
Planning, Drafting, and Administration of Special Needs Trusts
Drafting a Special Needs Trust requires many components. If there are any mistakes (even minor ones), they could be deemed invalid in court, and the special needs person no longer has the Trust’s protection. Working with an experienced Pennsylvania Estate Planning lawyer to plan, draft, and administer Special Needs Trusts is beneficial. They can advise you on which clauses are necessary and design the Trust in the best interests of the disabled person.
Difference Between Special Needs Trusts for Children and Adults
There are two types of Trusts available depending on if you need to create one for a child or an adult.
Special Needs Trusts for Children
A Third-Party Special Needs Trust is typically set up by the parents or grandparents of a special needs child. This Trust aims to ensure the child is taken care of once their parent or grandparent passes away. This Trust can be drafted one of two ways, on its own, or it can be added as part of the parent/grandparent’s Last Will and Testament. If prepared as part of the Will, the Trust doesn’t go into effect until the parent or grandparent passes away.
Special Needs Trusts for Adults
A Self-Funded Special Needs Trust is typically used when an adult becomes disabled later in life (usually due to an accident). This type of Trust will help protect any assets the person receives from potential settlements.
This Trust will usually include a “payback provision” clause. This provision explains that once the person passes away if any money remains in the Trust, it must be paid back to the state equal to the amount of assistance they received in their lifetime. If any money remains after, then it’s distributed to the beneficiaries.
Consulting with an Estate Planning Attorney Can Help You
If you’re considering a Special Needs Trust, consult with an experienced Pennsylvania attorney. They can help ensure everything is complete and accurate so the child or adult will receive the financial resources they need from public benefits.
At Auld Brothers Law Group, we will listen to your goals and objectives for your loved one. Then we will draft a Trust that includes your wishes while maintaining your loved one’s quality of life and government assistance eligibility.
Rebecca A. Auld is the Firm’s Principal. She helps many families in the Pittsburgh community make informed choices for their loved ones. Her experience and compassion have allowed her to form lifetime relationships with many clients that last for multiple family generations.
Contact Rebecca with your Special Needs Trust questions, so she can begin helping you.