Special Needs Trusts allow a disabled individual to receive lawsuit settlements, gifts and other funds while retaining eligibility for government programs. They are designed not to provide basic support, but to pay for things like education, recreation, counseling and medical attention.
Special needs can include medical and dental expenses, special equipment (such as vans for the disabled), training and education, insurance, transportation, special dietary needs, spending money, electronic equipment, computers, vacations, movies and payments for a companion.
In her article, Meeting Special Needs and the Need for Peace of Mind, New York Times writer Hillary Chura points out the many advantages to establishing special needs trusts. Ms. Chura writes,
"Most services for the disabled are provided through state-administered Medicaid programs, with Federal Supplemental Security Income providing a monthly stipend for adults. To be eligible for Supplemental Security Income, however, potential recipients cannot have more than $2000 in assets. Because that amount is inadequate for a lifetime of haircuts, hobby supplies, vacations and DVDs – expenses not covered by the government – a supplemental-needs trust can enhance quality of life. Without a trust, a lifetime of care for a disabled person could eat through even a sizable inheritance. . . .
While the term trust tends to imply great wealth, many special-needs trusts contain less than $100,000. Because the trust does not belong to the disabled person but is used to supplement a lifestyle, it does not compromise government benefits. . . .
Still, many parents are reluctant to start a trust because they fear making the wrong decision, do not want to face the idea that one day they will be unable to care for their child, or do not know how to establish one or whom to ask. In addition, they may not like the notion of putting their child on what is perceived to be welfare.
Some may believe they can avoid drawing up a trust by leaving the money to a trusted relative or friend. Specialists universally discourage that. Even people who intend to follow up on a moral obligation to care for the disabled child could lose the money in a divorce, bankruptcy, lawsuit, premature death or other unforeseen calamity, the specialists say."
For more answers to questions about Special Needs Trusts, contact a law firm that concentrates its practice in the area of Estate Planning Law.