Special Needs Trust Washington DC
If you need help with your Special Needs Trust in Washington, D.C., Kevin C. Martin, Attorney at Law, P.L.L.C., could help. Call now for a consultation!
What Is a Special Needs Trust?
Creating trust assets is an excellent way to pass property and resources to our loved ones, enabling them to avoid the probate process after your demise. Trusts are particularly beneficial when your aim is to ensure the financial security of relatives with special needs.
A special needs trust (SNT), sometimes referred to as a “Trusts Special,” is a type of trust you can establish to provide for a loved one with special needs when you are incapacitated, unable to care for them, or deceased. This trust, when properly crafted, helps maintain their financial stability while preserving his or her eligibility for government benefits such as Medicaid, housing, and Supplemental Security Income (SSI), a crucial component of Social Security.
Government benefits typically cover only basic needs. Thus, a special needs trust helps bridge this gap, enhancing the quality of life of the beneficiary in the absence of their primary caregiver. These trusts can either be standalone or pooled, as in Pooled Special Needs Trusts, with the latter combining resources from many beneficiaries for investment and management purposes.
Furthermore, selecting the right Special Needs Trustee is vital as they will manage the trust assets. An experienced attorney’s assistance in estate planning is invaluable to ensure a secure and stable future for your loved one with special needs while effectively preserving assets.
Public Benefit Limitation
People with disabilities are eligible for government benefits if their resources and assets are severely limited. Their total assets typically should be worth $2000 or less.
Therefore, transferring assets or money to individuals with special needs through means, such as a settlement check or inheritance, could prevent them from maintaining their eligibility for government assistance. This situation calls for the need for a well-drafted special needs trust.
Types of Special Needs Trusts
There are two major types of special needs trusts. They can be differentiated based on the source of the trust funds. They include the following:
First-Party Special Needs Trust
The assets of the individuals with special needs themselves fund this type of trust. This can include court settlements, inheritance, and personal finances. People with no prior disabilities and assets can also use first-party special needs trusts. Trusts are a great alternative to spending these assets to qualify for government assistance.
Third-Party Special Needs Trust
This trust is created and funded by a third party, such as a parent, grandparent, or relative. It can be funded during their lifetime or after death, e.g., via a life insurance payout.
What Is a Pooled Special Needs Trust?
There are also pooled SNTs that a first-party or third-party could fund. They are typically established by non-profit organizations that combine the assets of various special needs trusts to manage them on behalf of many different beneficiaries. The beneficiaries maintain separate trust accounts while their assets are managed together.
Who Is Eligible for a Special Needs Trust?
The Social Security Act outlines the criteria for a valid SNT while maintaining the beneficiary’s eligibility for public aid. These are:
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The individual must be less than 65 years old at the time of establishing the trust (for first-party special needs trusts).
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The beneficiary must meet the Social Security Administration’s (SSA) definition of having a disability.
How to Set Up an SNT
A special needs planning attorney can help you create a special needs trust by drafting all legal documents and representing you throughout the process. They can also help you choose a trustworthy trustee and guardian for your loved one.
Having a skilled attorney like Kevin C. Martin, who is compassionate about your situation and wants the best for you is a good idea. Working with an unqualified person can leave you frustrated and asking yourself, ‘is a trust necessary in the first place?‘ The truth is that a properly drafted trust will do your loved one with special needs a world of good.
Special Needs Trust Rules
A few rules guide the establishment and maintenance of a special needs trust. These trusts must meet the following criteria to continue maintaining the beneficiary’s access to public benefits:
- First-party trust funds can only be used for the benefit of the beneficiary.
- The SSA requires that the first-party trust instrument contain a payback provision stating that the trustee will use the trust to reimburse the state for Medicaid when the beneficiary dies.
- First-party trusts created after December 13, 2016, can be established by the beneficiary, their parent, grandparent, legal guardian, or the court.
- A first-party special needs trust needs to be irrevocable.
- Trust beneficiaries cannot receive direct cash payouts from the trust.
- Trust funds can only supplement government benefits, not pay for services already covered by government aid.
What Happens to Special Needs Trust After the Beneficiary Dies?
When a trust beneficiary dies, the trust is terminated in most cases. If it was a first-party SNT, the funds left in the trust must be used to reimburse the state for Medicaid provided to the deceased person during their lifetime.
In the case of a third-party trust, the payback clause does not apply, and the remaining trust assets can be distributed to other named beneficiaries or transferred to the estate of the deceased. The exact course of action depends on what was agreed upon in the trust document.
Therefore, third-party special needs trusts are excellent planning tools for those who wish to provide property to a beneficiary with disabilities, preserve essential public benefits during the beneficiary’s lifetime, and maintain control over where all remaining SNT assets will be distributed after the beneficiary passes away.
Although having these conversations might be hard, it is helpful to discuss the possible demise of your loved one with professional special-needs trust lawyers so that you can make adequate provisions for when the inevitable occurs.
How Can Kevin C. Martin, Attorney at Law, PLLC, Help?
To set up a well-structured special needs trust, you need the services of a professional estate planning attorney in Washington, DC. We understand how delicate this process is for you and your loved one. At Kevin C. Martin, Attorney at Law, PLLC, we have extensive experience helping families plan for their loved ones. We can provide sound legal guidance on the right kind of trust for you.
We serve as legal advisers and as compassionate listeners and friends to our clients, taking into account your worries and hopes to create the most suitable solution for you. By the end of the process, we want you to be confident that you have left solid financial security for your family member without jeopardizing their eligibility for public benefits.
If you are still in doubt or need help getting started, contact us for an initial consultation, and let us help you help your loved ones with special needs.