Estate planning is all about taking care of people – you and your beneficiaries. Some people face the future knowing they need to provide for a loved one with special needs. One way to do so is through a special needs trust.
Who Is Eligible For Setting Up A Special Needs Trust?
Obviously, the name tells you that the trust benefits someone with special needs, but under what conditions would someone be considered to have “special needs?” A strict definition would include physical, emotional, behavioral, or learning disability or impairment that requires special services or accommodations. The U. S. Code contains a lengthy definition of disability, but, basically, a disabled person has a “medically determinable physical or mental impairment.”
Arizona statutes define a special needs trust as one established to benefit one or more people with disabilities. One purpose of the trust must be to qualify for benefits for disabled people. By the way, remainder beneficiaries – people who will receive the remaining funds in trust when the primary beneficiary passes away – do not have to have special needs themselves.
Simply giving someone a large sum of money for support could hurt their eligibility for public benefits. That’s why special needs trusts are useful.
Choose The Trust You Need
First-party special needs trusts, also referred to as self-settled, are usually set up by:
- Adults whose disability is diagnosed after they have accumulated assets; or
- Adults who have received assets after qualifying for SSI or Medicaid.
Third-party trusts are more common, though. Sometimes called supplemental care trusts, families who want to take care of children with special needs will establish and fund these trusts.
When deciding how much money to transfer to your trust, keep in mind how much future care will cost. Also factor in the costs needed to set up and maintain the trust, especially if you’re using a bank trust department or other financial entity as trustee.
Special needs trusts are difficult to set up and require expert assistance. Typically, financial planners and attorneys experienced with trusts work together with the individual or family that wants to establish the trust. You’ll need to review trust provisions as laws regarding benefits change.
Call To Learn More About Setting Up A Special Needs Trusts
At Keystone Law Firm, we use our estate planning experience to help clients like you develop complete, appropriate personal estate plans. Call us at (480) 418-8448. We offer services for clients throughout Arizona, including Chandler, Gilbert, Sun Lakes, Tempe, Phoenix, Mesa, Scottsdale, and Apache Junction.