Providing care for a loved one with special needs can present unique challenges concerning care requirements and individualized needs. In addition to daily care, decisions involving financial management and emergency support are critical to ensuring the safety and reliability of any basic care plan for your loved one.

 A special needs planning attorney can guide families by explaining the benefit of a special needs trust and emphasizing the necessity of special needs planning. Examining potential need-based solutions before an emergency or change in financial or health status will protect you and your family members when unexpected changes and challenges arise. 

How Does Special Needs Planning Factor Into Estate Planning?

Whether you are single, married or have a family to look after, uncertainty is one of the primary reasons for establishing an estate plan. The purpose of an estate plan is to lay out necessary details and instructions for an assigned executor in the case of your death.

A family member with special needs can significantly impact your estate plan depending on the government benefits they receive or will receive in the future. An estate plan taking these critical benefits into account ensures your loved one will not lose these public benefits.  Working with an experienced special needs planning attorney will ensure that all areas of your estate plan are built with thoughtful consideration of your loved ones’ unique needs. 

Whether your loved one with special needs is eligible MedicaidSupplemental Security Income (SSI)Social Security Disability (SSDI), housing vouchers,food stamps or other public benefits, these must be part of the consideration when designing an estate plan so that your loved one does not lose these government benefits by receiving an inheritance or other assets.

When appropriate, individuals with a disability maintain control over their property unless they become unable to make informed decisions. If this happens, there should be a written plan in place for the succession of responsibility. Should guardianship become a requirement, it is crucial to have an established plan ready to implement instead of relying on the court system to appoint an appropriate guardian that may or may not be up to the task.

Why Is A Special Needs Trust Important? What Are The Consequences Of Not Having A Special Needs Trust?

To maintain eligibility for government benefits, a person with special needs generally needs minimal assets unless they are enrolled in a special program or contributing to a STABLE account. For a special needs individual to have extra resources, a special needs trust provides additional financial support to supplement their government benefits.

A special needs trust protects eligibility for benefits by utilizing assets as supplemental support rather than replacing existing public benefits. A special needs trust enables money and other assets to be available for the care and well-being not paid for by public benefits of an individual with special needs without risking their eligibility and access to assistance.  

A special needs trust maintains assets for purposes other than what public assistance provides, such as travel, recreation, over-the-counter medications, entertainment, consumer products or any additional treatments that are not covered. Having a special needs trust appropriately built into your estate plan can ensure that your loved one still has access to an inheritance without sacrificing their eligibility for public benefits. If you intend to leave any assets for a loved one with special needs, having a special needs trust will ensure your loved one maintains the critical public benefits while accessing additional resources when needed.

What Is Typically Included in a Special Needs Trust? How Does It Differ From a Third-Party Special Needs Trust?

There are different types of special needs trusts. The type used when developing your estate plan depends on the source of the money funding the trust. First party trusts are funded with the special needs individual’s own money. These are also called payback trusts and require, in the event of the beneficiary’s death, remaining funds are paid to the state to reimburse the state for the cost of providing services. This type is utilized for individuals with special needs who receive assets, typically through an inheritance or settlement, exceeding the resource limit determined by the State of Ohio. 

The other type of trust is a Third Party Special Needs Trust and is created and funded by a third party. Third Party trusts do not contain any payback provisions and any remaining funds are distributed according to the Grantor’s (person creating and funding the trust) own estate plan. These third-party trusts are discretionary, allowing the trustee to exercise discretion in the use of assets. This type of special needs trust is most desirable method to provide for a special needs individual because remaining assets upon the death of the special needs beneficiary can remain in the family rather than paid to the state. 

Important to Consider:

What Is a Pooled Trust and How Does It Apply to Special Needs Planning? 

A pooled trust is considered a type of payback trust where the funds are pooled together from multiple parties to benefit the individual while they are living. These trusts are often created in partnership with and ultimately managed by a 501(c)(3) non-profit organization.  

Upon the beneficiary’s death, any remaining funds are first paid to the State of Ohio to reimburse the state for any expenditures providing services to the disabled or special needs individual. These trusts are an economical manner for a special needs individual to remain on public benefits upon the receipt of assets, such as a settlement or inheritance.

Additional Information:

Special Needs Planning Frequently Asked Questions 

What is a Special Needs Trust?

A special needs trust is a trust for the benefit of a disabled individual designed to preserve the disabled individual’s ability to receive public benefits.

Why is a Special Needs Trust necessary?

When a disabled individual on public benefits receives money or assets it may result in the termination of those benefits.  Without a Special Needs Trust the funds would need to be exhausted before the individual would qualify for benefits again.  By placing funds in a Special Needs Trust the individual will have the trust resources to supplement their public benefits and will continue to receive their much-needed public benefits.

What are supplemental needs?

Supplemental needs are the needs other than the basic support needs (food and shelter) of the disabled individual.  Some examples are home modifications for the disabled individual, medical treatments or equipment not provided by public benefit programs, recreational or travel opportunities, and prepaid funeral arrangements.

Are there limits to how money in Special Needs Trusts can be spent?

Yes, the money must be spent for specific purposes allowed by law.  Trust assets cannot pay for needs public benefits are intended to provide. Generally, any expenses are paid directly, and cash is not provided to the disabled individual.

Are there different types of Special Needs Trusts?

Yes, generally there are two types – a self-settled trust and a third-party trust.  A self-settled is a Special Needs Trust is established by the disabled individual under 65 years of age using assets that belong to the special needs individual.  If the individual is over 65 years of age, a pooled trust may be an appropriate option.  A third-party Special Needs Trust is established by someone other than the special needs individual using the third-party’s funds.

What is a STABLE Account?

A STABLE account is an investment account that enables a disabled individual to save money while remaining on public benefits.  Much like a retirement account the money contributed may be invested.  There are limits to how much an individual may contribute on a yearly basis to this account.  For example, a STABLE account allows a SSI and Medicaid recipient to accumulate more than $2,000.

Do I need a Special Needs Trust and a STABLE Account?

To maximize the disabled individual’s financial freedom, it is best to have both.  A STABLE account is not ideal to manage significant third-party funds because there is a Medicaid payback claim upon the disabled individual’s death.  A STABLE account is a helpful secondary tool to save money to pay for needs that a Special Needs Trust is unable to pay for.  It is important to discuss the use and benefit of both with an experienced attorney.

We’re Here for you:

Let us assist with planning For the care of your loved one with Special Needs 

If you are a caregiver to a child or loved one with special needs, you have probably thought about what their future may look like when you are no longer able to care for them. Drawing upon our extensive experience, KJK’s Estate Planning Group can advise clients of the options available for planning for special needs care.

We are well versed in assisting with setting up special needs trusts to supplement your loved one’s Social Security and Medicaid benefits without affecting their eligibility. Our knowledgeable team of attorneys can help your loved ones with disabilities maximize their assets or future inheritance while providing you with peace of mind.