Are Special Needs Trusts Allowed in All States

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Having a child with special needs, or living with a person in this condition comes with a lot of worry about what will the future hold… That is why it is useful to consult an attorney working with these issues and see what you can do to make the future as planned and secured as possible.

For one, according to specialneedsalliance.org each person with special needs can be taken care of well if their family members (or someone else) choose to establish a special needs trust. Each state in the USA has its version and law regarding this matter. But, let’s take a look at the main facts one should know about this trust.

What are these trusts?

These trusts have been established as irrevocable trusts that serve for the benefit of individuals with special needs. It basically serves to protect the right of having proper medical care, as well other support provided by the states an individual lives in.

What are the benefits of a trust?

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Well, there are several of them.  One of the most important benefits, however, aside from receiving proper medical care is, protecting the assets and property of such individuals, while maintaining their eligibility for the support a state offers.

Depending on the type of disability, an individual can also be suffering mental incapability to control their finances and other assets. So, the idea is to have a person of trust (trustee), who will be in charge of protecting the assets of this individual, making sure everything is under control. A trustee is a person with great responsibility, since his every decision and action when it comes to protecting the assets, has to be in the best interest of the person with special needs.

Can the assets be given directly to the person with special needs? The answer is no. However, they are meant to be spent on something useful to them, such as personal care, medical expenses, education, or any other service or goods that are assessed as necessary for this individual. What is good about the financial assets of this trust is that they cannot be an object of seizure, and cannot be subjected to creditors.  As such, they remain at the disposal of an individual, for the care they may need at any moment.

What does it mean – such an individual remains eligible for other government programs?

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Let’s say, this individual, in this case, an adult, holds more than $3,000 in assets. Having those assets automatically makes him or her not eligible for SSI, which usually gives a monthly allowance to individuals with special needs. If a person is eligible for SSI, he is also eligible for other programs provided by the government, such as food stamps, for example.

As we’ve already mentioned, depending on a state, it can be that the person is not capable of managing his own financial assets which is why he’s using a special needs trust, and for this reason, these assets are not considered when the calculation of total assets starts. Therefore, having such a trust ensures he or she remains eligible for all the benefits given by the state.

Who can establish this trust?

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First of all, it’s important to mention that this trust is governed by a special act. As for who can set it, it can be literally any member of the family, but also a caregiver or a friend. There is one condition though – it is supposed to be established before a person’s trust is being intended for, turns 65.

A person who is to establish the trust is in charge of executing the necessary documentation, appointing a person as a trustee, and of course, taking care of funding.

The language in which the document is being drafted has to contain elements like the reason for which the trust is being established. In this case, it is for a person with special needs who is to be taken care of extra, aside from the care they receive from the government programs. The document of course names a trustee and his responsibilities.

Aside from family members and friends, a trustee could also be an institution, such as a bank, or some professional who has expertise in financial issues.

If you think the trust can only be funded by money, this is not the case. It can include any other assets, such as inheritance, lump-sum payment from SSI, income, and so on.

A couple of things to keep in mind…

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When you read articles available on the internet, you’ll find out that when moving to another state, some things may complicate the usage of the trust. Although every state has some kind of trust of this type, not all of them treat it the same. Not all of them treat the amount a person is entitled to via SSI.

So, this amount may go up or down, depending on where you are moving. Therefore, before you move, make sure you dig up all information about what is necessary for transferring, and how much of an allowance will the person you’ll be moving with be entitled to.

Should you need help in creating the trust, find a good attorney

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It’s also important to know that there are attorneys specialized in the matter, that can help you make the most of the complicated situation you and your family member are in. These attorneys will guide you to establish such a trust, that will ensure a bright and secure future for those in need.

Final word

Also, be careful about who you assign as a trustee. It should be someone who you deeply trust, who will always make decisions based on the benefit of the one the trust is set for. By no means should it be someone who you see carries the smallest risk of being manipulative with the assets you are putting in the trust.

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