In order to qualify for resource-based benefits like Social Security Income (SSI) and Medical Assistance (MA), an individual with special needs cannot have assets in his or her name in excess of a certain amount. For families who wish to leave assets to their special needs children through their estate plan – whether through their Wills or a life insurance policy – a Special Needs Trust can be established to receive those assets while insulating the recipient from having the trust counted as an asset. A properly drafted Special Needs Trust containing a million dollars counts as zero dollars in assets when the government evaluates an individual’s eligibility for resource-based benefits.
SOMETIMES YOU DON’T KNOW WHETHER A SPECIAL NEEDS TRUST IS NEEDED YET!
But how can you know now if a Special Needs Trust should be part of your estate plan? It can be difficult for the parents of a young child with special needs to know whether their child will need any resource-based benefits ten, twenty, or thirty years in the future. Early intervention, job training, and special education can bring young children to a point where they will not need or qualify for those types of benefits by the time they reach adulthood, at which point the need for a Special Needs Trust may be moot. When we encounter families who think their child may someday need MA or SSI, we draft a flexible estate plan for them which allows for the possibility of funding the trust in the future without limiting their options for their children.
In estate planning, like in many things in life, an ounce of prevention is worth a pound of cure. If an individual receiving SSI or MA inherits a large sum of money after a parent passes, his or her benefits can be interrupted and a family can lose the right to decide who will receive the balance of the inheritance after the individual with special needs passes away.
For families with children who may someday need a Special Needs Trust, we frequently draft and establish the Special Needs Trust, leaving it unfunded until both parents of the special needs child have passed away. The trust exists to receive assets from the estate of the parents if the executor of their estate thinks it is necessary. The decision by the executor will hopefully be made decades in the future, when he or she will know lots more about the needs and abilities of the individual with special needs. By giving an executor discretion to either fund the Special Needs Trust or not based on whether the individual with special needs is then receiving (or likely to receive) qualifying benefits, the family has protected their child and allowed for a more informed decision to be made about funding the trust.
Having a Special Needs Trust drafted for your child doesn’t mean he or she is going to be unable to work or earn income or procure their own health insurance. When paired with a flexible estate plan, a Special Needs Trust is an excellent tool in our arsenal for protecting your child’s future. If you have any questions about whether a Special Needs Trust and flexible estate plan would be appropriate for your family’s situation, then please reach out to us! The Pennsylvania special needs trust attorneys at Herr Potts & Potts help with estate planning for individuals with special needs and their families.To learn more about the requirements of SNTs in Pennsylvania, you should speak with an experienced West Chester trust lawyer.
Work with Our Estate Planning Lawyers to Create a Special Needs Trust
If you wish to care for your family member by establishing a special needs trust, you should contact an experienced lawyer based in Chester County, Montgomery County and Delaware County estate planning lawyer. The lawyers at Herr Potts and Potts have represented clients in southeast Pennsylvania for over 80 years, and we are here to represent you. We understand the burdens of dealing with a disability, and we are for your family in your time of need. To schedule a confidential consultation, call us at (610) 254-0114.