Moorestown Special Needs Trusts Lawyer

Moorestown Special Needs Trusts Lawyer

Special needs trusts provide important sources of financial support to disabled individuals hoping to continue to receive government benefits. There are two types of special needs trusts, and the legal team at Scott Counsel, PC can assist with the creation of either one.

Estate planning is a deliberative process which should enhance the well-being of our loved ones. If you are seeking to leave assets to a disabled individual, or if you are disabled yourself, we can discuss how to qualify for governmental benefits using the right legal vehicle. Contact a Moorestown special needs trusts lawyer today to schedule a consultation.

Medicaid & Supplemental Security Income (SSI)

Disabled individuals often qualify for several types of government benefits. But two important government programs, Medicaid and SSI, are means tested.

Medicaid is a federal health insurance program run by the states. It is an important benefit for many people with physical or mental disabilities who otherwise cannot work and will not have health insurance through an employer. Medicaid is only available for those with low incomes.

SSI provides income to someone with very few assets. People rely on SSI benefits for food, clothing, and shelter, as well as other essentials. In 2022, the maximum SSI payment a single person could receive was $872.25 a month, or $1,051.05 if the person was living in a licensed residential health care facility.

Estate Planning and Disabled Beneficiaries

You might want to provide for a disabled child or other relative in your will. But if you leave them money or property, it will probably count for purposes of means testing. For this reason, you might end up disqualifying the person from badly needed Medicaid or SSI benefits.

Many of our clients with a disabled loved one feel caught between a rock and a hard place: wanting to provide for a vulnerable family member while at the same time wanting them to continue to receive the government benefits they deserve. Fortunately, there is a way they can accomplish both goals: create a special needs trust.

What Are Special Needs Trusts?

A trust is a legal way to own property. It is run by the trustee, who manages any assets owned by the trust for the benefit of one or more beneficiaries. With a special needs trust, the beneficiary is a person with a disability. They can use any income distributed to them for certain expenses.

There are two types of special needs trusts the legal team at Scott Counsel can create:

• First-Party Special Needs Trust

Someone who is disabled can create their own trust, called a self-settled trust. They will use assets that they own and transfer them to the trust, naming themselves as the beneficiary. Often, they transfer funds they received from a personal injury or workers’ compensation settlement, or lottery winnings or some other windfall.

• Third-Party Special Needs Trust

We usually create this type of trust as part of a client’s estate plan. A common example is a parent who is creating a will and has a disabled child. If the child inherits through the will, they could lose out on government benefits, so we create a trust for the disabled child.

The trust can immediately go into existence, or it might be created at our client’s death. Either way, the child is taken care of by providing them with some assets that won’t disqualify them from Medicaid or SSI.

A trust might have assets remaining when the beneficiary dies. If so, the person creating the trust can name a secondary beneficiary who will receive what is left. For example, you might name other children as the secondary beneficiaries so they can partake in these assets once your beloved disabled child passes.

Choosing the Right Trust

Sometimes you won’t have a choice about creating a first-party or third-party trust. If you are disabled and want to use your own assets, you will need to create a self-settled trust. If you are a parent, you might create a third-party special needs trust or gift assets tax-free to a child so he or she can create a self-settled trust.

There are important differences between the two. For example, a self-settled trust could still require that the beneficiary pay back Medicaid expenses. Let a Moorestown special needs trust attorney guide you through choosing the right trust for you and your family.

Funding a Trust

Once a trust document is created, our clients need to transfer ownership of assets to the trust. A trust can funded by any type of asset, such as:

• Cash
• Investment accounts
• Stocks
• Bonds
• Real estate
• Rental property
• Business interests
• Jewelry
• Artwork

The key, however, is to generate income for a beneficiary. If you put jewelry into a trust, the trustee will probably have to sell these assets to generate money to distribute. If you put cash or liquid assets like stocks, then administering the trust is easier.

Some clients who set up a third-party special needs trust fund the trust using a will. Essentially, they leave assets to the trust, which get distributed only after they die. This is an effective way to ensure a trust is properly funded while still retaining the use of assets while you are living.

A Trustee’s Duties

The trustee manages the special needs trust for the disabled individual. Many of our clients are parents who wish to manage the trust themselves. This is possible, though sometimes a professional trustee is the better choice, depending on the assets held in the trust. Professional trustees do charge a fee, and an attorney can help you find someone with the necessary experience and skill.

The trustee has many key duties:

• Investing trust assets
• Spending the assets for the benefit of the disabled person
• Keeping records of investments and disbursements
• Submitting reports to the federal government
• Filing tax returns

As you can see, the government wants assurances that the trust is being properly administered, otherwise your loved one’s benefits could be in jeopardy.

Moorestown Special Needs Trusts Attorneys

If you are interested in creating a trust, please contact Scott Counsel today. We offer consultations to those who call (856) 281-3131 or who send us an online message.