Creating a Special Needs Trust

Special Needs Trusts, also known as SNTs, are created for the benefit of a disabled individual who is under age 65. You may create this type of trust using your own assets to fund the trust. When properly created, you may assist the beneficiary financially without disrupting the beneficiary’s government benefits. Whether you are a Fort Wayne area resident or live in another state, you will need the assistance of an attorney to create this unique document.

You should gather the following information about the disabled beneficiary prior to your meeting with a knowledgeable estate planning attorney:

Daily habits and specific needs.

Ability to handle money.

Need for adaptive equipment.

Medical diagnosis, including a physician’s report.

You should also consider the person you may designate as trustee, including that person’s successor or alternate. It will also be helpful to consider the names of individuals who will receive any funds remaining in the trust after the beneficiary’s death.

The terms of these trusts are complex and should be drafted carefully. To avoid disrupting the beneficiary’s government benefits, the trust should state that it is your intent to provide supplemental or extra care above the care the government provides. The trust must also state explicitly that it is not intended to provide basic support because providing basic support would most likely disqualify the beneficiary from receiving public aid. Since there are stringent government requirements, we do not recommend creating a SNT without the assistance of a qualified attorney.

Repayment obligations should also be discussed with your attorney. In some instances, the trust assets may be subject to Medicaid reimbursement rules after the beneficiary’s death. The repayment obligation occurs when the trust holds assets that originally belonged to the beneficiary and were transferred to the trust. Some examples of these type of assets are earnings from employment, savings, and personal injuries recoveries which are not directed by court order into the trust.

As long as you are working with an experienced attorney who has created Special Needs Trusts, you should be able to improve the beneficiary’s lifestyle by providing care, equipment, and even recreational opportunities that public aid does not cover. We are experienced and available to help you with some of the difficult decisions you may face when you create estate plans involving disabled individuals. For example, in addition to funding SNTs during your lifetime, you should consider passing an inheritance at your death to the SNT to continue the supplemental care for the disabled person if you predecease the disabled beneficiary. Other family members interested in leaving gifts to the disabled person should also be informed of the SNT so their gifts may be directed to the SNT protecting the government benefits your disabled beneficiary may be receiving.