Hammonton Special Needs Trusts Lawyer
Hammonton Special Needs Trusts Lawyer
At Scott Counsel, P.C., many of our clients come to us expressing a desire to provide for a disabled loved one, usually a child or grandchild. Beneficiaries with physical or mental limitations present unique problems for estate planners because these individuals often qualify for means-tested governmental benefits. Consequently, simply leaving them a chunk of money in a will could ultimately end up disqualifying them from government benefits they otherwise would receive.
One way to provide for a disabled loved one is with a special needs trust. This is a common way of holding property that allows individuals to benefit from trust assets while at the same time qualifying for government benefits.
How a Special Needs Trust Works
The two major government programs that many disabled individuals qualify for are Medicaid and Supplemental Security Income (SSI). Medicaid will pay for medical care, which is crucial since many disabled individuals will never hold a job or be able to buy a health insurance policy on their own. Meanwhile, SSI provides money to disabled individuals with few assets or little income.
If you were to leave $100,000 to a disabled child, those assets would suddenly count for purposes of program eligibility. That would be counterproductive. True, your child would inherit money to help support them—but only at the price of losing out on government benefits.
However, if you put the assets into a trust, then the assets are owned by the trust. You would name your loved one as the beneficiary. Because they do not own the assets or control them, they will not count for government programs.
The assets used in the special needs trust can go to a variety of services or expenses for your loved one. Put simply, the funds can’t go to anything that government benefits would cover, though sometimes they can be used for transportation or housing costs.
Creating a Special Needs Trust
At Scott Counsel, we can draft an air-tight special needs trust that will provide for a loved one while you are living or when you pass. We typically create one of two trusts:
- First-party special needs trust. A federal law passed in 2016 allows those with functional needs to create their trust, called a self-settled trust. Assets in the trust will not count for purposes of Medicaid or SSI eligibility. In many cases, our client is a loved one who reaches out to an attorney to begin the process of creating the trust. However, the assets that are placed into the trust belong to the beneficiary.
- Third-party special needs trust. With this trust, our clients use their assets to fund a trust for the benefit of a disabled person. The trust can go immediately into effect, or it might be effective only after our client passes away.
We recommend meeting early with a Hammonton special needs trust lawyer to review which option is best for you and your family. The two trusts are not equivalent, and a self-settled trust might have more limitations.
Placing Assets in the Trust
Our clients can put any type of property into a trust, including cash, stocks, bonds, real estate, jewelry, or business interests. Of course, some assets are easier to manage than others, and this is a concern if you intend to serve as the trustee. For example, investing in stocks might be too difficult for you, as would managing real estate property. Instead, mutual funds or cash could be easier to manage as a trustee.
With a first-person special needs trust, most disabled individuals use funds they received in a windfall, such as a personal injury or medical malpractice settlement, divorce, lottery, or workers’ compensation claim. Assets must be held in the name of the trust, which is what gives the trust its special character and removes the assets from the countable assets of the disabled person.
Selecting the Trustee for a Special Needs Trust
A trust holds the title to assets, which a trustee manages for the benefit of the disabled beneficiary. As you can imagine, the choice of trustee is important. Some of our clients choose themselves as the trustee, either because they do not trust anyone else or because they want to avoid paying professional trustee fees.
However, a trustee must do many tasks that could overwhelm even the most loving family member:
- Investing or managing the trust fund assets
- Spending the assets for the beneficiary’s benefit
- Maintaining detailed records
- Submitting annual reports to Medicaid and SSI
- Filing tax returns
Improper or careless administration of the trust could jeopardize your loved one’s eligibility for Medicaid and SSI. Fortunately, a seasoned Hammonton special needs trusts attorney can advise you on administration issues and answer any questions you have. We can also help you name a trustee to succeed you once you die so the trust will continue to run smoothly.
When the Special Needs Trust Ends
A special needs trust will usually end either when the beneficiary dies or the trust runs out of money. Most clients try to structure the trust so that income will last for the entirety of the beneficiary’s life. This can take quite a bit of planning with an attorney, who will discuss how many assets to put into the trust and how to invest them so they grow over several decades. Some beneficiaries could live for 30 or more years after our clients die, so ensuring the trust isn’t exhausted requires careful planning.
If there is money left over after the beneficiary passes, then the assets can go to a secondary beneficiary named in the trust. Some people leave the remainder to the rest of their family.
Scott Counsel is Eager to Help
Our firm takes great pride in representing clients with a disabled family member or those clients with disabilities themselves. A special needs trust is a terrific way to ensure peace of mind while still allowing access to needed government benefits.
To learn more, please contact our firm today by calling (856) 485-4585. We provide confidential consultations at a convenient time.
– When my son, who has Cystic Fibrosis and CF related diabetes, was suddenly and unexpectedly removed from his Medicaid program, we were devastated and frightened not knowing where we would get the resources to pay for his extremely high priced prescriptions. Justin was the attorney who handled our case. From the very beginning, he proved to be very thorough and experienced with navigating the process of reversing the Medicaid decision. However, it was his apparent kind, caring nature that made us feel the most at ease. Justin was successful in securing a continuation of benefits for my son, and we are extremely grateful for having his expertise during this most stressful ongoing process. Thank you, Justin!
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