There are nearly one million U.S. households in which an adult with intellectual or developmental disabilities is living with caregivers 60 or older. Nationwide, half of caregivers are older than 50, and 10% are 75 or older. According to a survey by the Family and Individual Needs for Disability Supports, most caregivers have serious concerns about the future — for themselves and for their son or daughter with I/DD. This is where a special needs trust can make a significant difference.
What is a special needs trust? A special needs trust is a type of trust that is designed to provide for the needs of a person with a disability while preserving their eligibility for government benefits, such as Supplemental Security Income (SSI), Medicare, and Medicaid. This is particularly important for seniors who are concerned about their child or grandchild’s future care and well-being.
In its basic form, a special needs trust requires that assets be deposited into the name of the trust. That money can be used to provide for many needs and comforts of the beneficiary, such as housing improvements, transportation vehicles and medical equipment. However, the money is in a trust that can never be paid directly to the beneficiary. This protects the beneficiary for losing their eligibility for services because they have too much money to qualify for assistance.
In addition, special needs trusts can help seniors protect their assets. By placing their assets into a special needs trust, seniors can ensure that those assets will not be counted against eligibility for government benefits. This can be particularly useful for seniors who may need to qualify for government benefits in the future, such as Medicaid, to pay for long-term care.
Moreover, a special needs trust can also help seniors avoid probate. Probate is the legal process of administering a deceased person’s estate, and is notoriously slow, costly, and public. By placing assets into a special needs trust, those assets can bypass probate and be distributed according to the terms of the trust.
How do special needs trusts benefit seniors specifically? For starters, seniors can use a properly drafted special needs trust as part of their overall estate plan to provide for a loved one with disabilities in a variety of ways, such as housing improvements and transportation vehicles. It can also pay for medical equipment that may not be covered by insurance, as well as education, including tutoring and special programs designed for people with disabilities.
Moreover, seniors can also create a testamentary special needs trust for their spouse through a will. This can provide for the surviving spouse even if they are receiving Medicaid benefits in a nursing home. This can be particularly useful in a difficult time, as the senior can protect and provide for their spouse most effectively.
A special needs trust can even assist a senior in qualifying for long-term care through Medicaid’s nursing home program. If structured properly, the senior may be able to transfer assets to a special needs trust for the sole benefit of the special needs individual without incurring a penalty. This is an important exception to the transfer for assets penalty and can help seniors afford the care they need while also ensuring their loved ones with disabilities are provided for.
Setting up a special needs trust can provide peace of mind for seniors and their families. Knowing that their loved one with special needs will be provided for and protected can bring a sense of security and comfort. This can be particularly important for seniors who may be concerned about the future care of their loved ones.
A special needs trust can be a powerful tool for protecting the assets of a child or grandchild with I/DD to ensure their continued eligibility for government benefits. It can also provide peace of mind for seniors and their families. By working with an experienced estate planning attorney, seniors can create a customized plan that meets the unique needs of their family and provides for their loved ones for years to come.