Far too often, I see a confluence of two things: 1) misinformation or half-truths about special needs planning, and 2) parents of special needs children who really do their homework. It can be especially frustrating when attorneys who only know a little about estate planning for special needs beneficiaries who happen to get a hold of a template for a special needs trust.

The fact is that *separate* special needs trusts are not used all that often in estate planning (or at least they shouldn’t be) because the RIGHT kind of revocable living trust can provide all of the protection needed. In some cases, an IRA Trust is needed to separate and protect tax-qualified inheritances, and in this case a separate IRA Trust also needs to have all of the right provisions to protect a special needs beneficiary.

Two specific situations where a separate special needs trust needs to be set up as part of the estate planning process are: 1) someone else, typically grandparents, want to gift or leave an inheritance specifically for a special needs beneficiary, or 2) separate life insurance proceeds are to be earmarked for the special needs beneficiary above and beyond what the other beneficiaries may be getting.

For more information, please see my book “The Simple Guide to Special Needs Estate Planning” available at:

amazon.com/dp/1935896156

8406 Six Forks Road, Suite 102
Raleigh, NC 27615
(919) 844-7993

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Planning for the future can be a daunting process, especially when you have a loved one who has a disability or special needs. One of the most critical aspects of planning for such individuals is establishing a Special Needs Trust.

A Special Needs Trust (SNT) is a trust established to hold assets for the benefit of a person with a disability or special needs without jeopardizing his or her eligibility for government benefits such as Medicaid or Supplemental Security Income (SSI). Assets held in an SNT are not counted as a part of the individual’s income or assets, which can help maintain their eligibility for government programs.

So, when do you need a Special Needs Trust?

If you have a child or a loved one who has a physical or mental disability, establishing an SNT should be a top priority. This type of trust is crucial because it helps protect your loved one’s financial future while still allowing them to receive essential government benefits.

Without an SNT, their eligibility for government benefits could be jeopardized, and their long-term financial security could be in danger. For instance, if they receive a lump sum of money or inherit a significant amount of money through a will or insurance policy payout, it could disqualify them from receiving valuable government benefits.

The assets placed into an SNT can be used to pay for goods and services that government programs don’t cover, such as home health care, therapy, and other forms of medical care that may be required. It can also be used to improve their quality of life, such as purchasing a wheelchair or modifying a home to make it more accessible.

Creating a Special Needs Trust requires careful planning with a qualified attorney, and it is essential to choose the right trustee who is trusted, reliable, and responsible. A trustee’s role is to manage the SNT and make distributions for the beneficiary’s benefit.

In summary, establishing a Special Needs Trust is a crucial way to ensure the long-term financial security and well-being of your loved one with a disability or special needs. If you are a parent or caregiver to a person with a disability, and you haven’t yet created an SNT, it’s crucial to consult with an attorney who can help guide you through the process of establishing one.