What Is A Special Needs Trust?

A special needs trust is a planning technique used when a will alone is not enough. A will is great at distributing property after you pass away. However, if you have a disabled beneficiary, or you are trying to protect assets from long term care expenses, a will is not enough. Instead, you should consider a special needs trust to protect your assets.

If you fall into either of these two categories, a special needs trust can benefit you because:

• You can keep assets in a special needs trust while still taking advantage of government programs that support the special needs person
• You can leave money to a special needs person without cutting off the government support they are receiving
• You can preserve assets when needing long term care, so that you can pass that money on to your kids instead of paying everything to the nursing home, or to the government

If you don’t have a special needs trust, you could likely end up paying most, if not all, of your money to the government or to a nursing home.

Getting A Special Needs Trust In Colorado

As a basic definition, a special needs trust is a type of trust that protects money, or other assets, for someone who has a disability, or other reason that money or assets should not be given to the trust beneficiary (a person with special needs) outright.

Basically, a special needs trust sets up a place to put money or assets that will be used to care for a disabled person, without disqualifying the disabled person from still receiving a benefit from the government based on financial measures or needs. To protect assets, special needs trusts need to meet the strict requirements each program sets up.

A special needs trust allows such money or other assets to be used for the benefit of someone who is generally receiving some sort of needs based assistance from a government program – frequently Medicaid, but not always. For a physically, or mentally disabled individual, a special needs trust allows the person with the disability to continue to receive a government benefit, or other benefit from some sort of other community based program, while still getting the benefit of money left to the disabled individual.

Who Could Benefit From a Special Needs Trust?

There are many reasons a person might need a special needs trust:

• If you, or your family member, is disabled for a long time, even from birth, and just needs assistance to live life.
• If you are elderly and are trying to protect your assets if you need Medicaid to pay for long term care.
• Other individuals might have been injured, or are sick, so they would be trying to qualify for SSDI assistance.
• Other people might have fallen on hard times, become addicted to some sort of drug, and need assistance.

No matter what the circumstances were that led someone to need assistance, a special needs trust can be helpful to anyone who is looking to preserve assets, while still qualifying for a government benefit or other assistance that has needs based criteria.

 >> Further Reading: Protect Your Family: The (Mostly) Complete Guide To Special Needs Trusts

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The Specifics For Special Needs Trusts

What’s the government program you want to qualify for?  Each program has different qualification criteria, so a special needs trust needs to account for those criteria.  We cannot promise that we know all of the criteria for every program immediately, but before setting up a special needs trust, we want to make sure the criteria are met.  Some common programs include:

✅ SSDI;

✅ Medicaid;

✅ Other State/Community-based programs that help pay for people’s needs.

The Basics For Special Needs Trusts

✅ List of Assets, including approximate value – if you have investment assets, please bring a recent statement from the brokerage house that holds the assets

✅  A recent bank statement

✅ List of names, addresses, and phone numbers for those to whom you plan on leaving assets in a will – usually this is children, relatives, or even charities

✅  A copy of the deed to any real estate you own – if you can find it

✅ Decide who you want to use as your agent under a power of attorney, and that person’s name, address, and phone number, if not included above

✅ Decide who you want to be in charge of distributing your assets upon your death, including that person’s name, address, and phone number, if not included above

Download This Checklist

Who Is The Best Fit For A Special Needs Trust?

A special needs trust is mostly for the physically or mentally disabled, or for elderly individuals who are concerned about long term care costs. Establishing a special needs trust for these types of individuals makes the most sense. If you are trying to establish a special needs trust because you have a disabled child or relative, then you want to set up a special needs trust for the benefit of the disabled child or relative. If you are trying to set up a special needs trust to benefit yourself as you become older, then you can do so, but such planning will likely involve using your children, or other trusted individuals, to control assets and protect them.

Whether the special needs trust is for yourself, or for your child or other relatives, you will want to consult with an experienced attorney to properly set up a special needs trust. A trust that does not meet the strict requirements for a special needs trust may provide no protection and result in assets going exactly where you are trying to avoid…the government. Let us help you establish your special needs trust the right way!