Over the last two months, families have generally spent more time together due to the quarantine related to the Coronavirus. Some families have had their family member, who is living with a physical, mental or intellectual disability or has special needs, return home from a residential facility.  The individual may not have been permitted to remain in the facility, for the time-being. The constant contact and interaction between family members may have brought about questions such as: Who will care from my loved one when I am gone? How can I financially help my family member? How do I plan for a safe, happy and productive life for my loved one?  Through proactive planning, a third-party special needs trust can be created to allow money, in the form of a gift, to be deposited in the trust, for the sole benefit of the person living with the disability or special need.

Third-party special needs trusts are established with assets of someone other than the beneficiary (the person living with the physical, mental or intellectual disability or special need).  The beneficiary can be of any age, from infant to senior adult. Many times, the trust money is gifted by the parents or family members.  Other times, money may be gifted into the special needs trust by friends, church groups, or interested parties.  All money deposited in this type of trust is required to be used for the sole benefit of the beneficiary. 

A third-party special needs trust can be established either while the person gifting the money is alive or it can be established through a will.  The key benefit, of this type of trust, is that there is no Medicaid-payback provision. Due to the assets never actually belonging to the beneficiary because the money is a gift, the government guidelines state that no money will be required to be paid to the state, at the beneficiary’s time of death.  If any money remains in the third-party special needs trust, at the time of the beneficiary’s death, the remaining money can be given to whomever is listed in the legal document that established the trust. 

A recent client learned about special needs trusts through the residential facility where the man’s younger brother resides.  The younger brother is living with Down’s 

Syndrome.  The brother was sent home during the Coronavirus due to the facility closing during the quarantine. During this same time, the men’s father died leaving them both a substantial amount of money.  The older brother realized that some special planning needed to be made for his sibling so the brother’s government benefits (Supplemental Security Income and Medicaid) would not be taken away.  

The brother established a third-party special needs trust for his younger brother.  The money from the inheritance was placed in the trust.  The brother was able to help in planning how the trust money would be invested.  He worked closely with his specialized attorney and the professional trustee in designing some special activities, purchases, therapies, and vacations his brother could benefit from now and in the future. This careful planning gave the brother peace of mind, knowing his sibling would be cared for throughout his lifetime.  

It is essential that families who have a family member who is living with a physical, mental or intellectual disability or has special needs become involved in proper planning from a professional who understands special needs trusts. By working with a qualified attorney and choosing a professional trustee, the family can feel reassured in knowing that their family member will receive professional service and be able to qualify or maintain the government benefits that are needed to enable their relative to receive the healthcare necessary to sustain life and have the financial means to live a good quality of life.  

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*For more information on special needs trusts, please contact Vista Points, Inc. at 888-422-4076 or info@vistapoints.org