Why Every Will or Trust Should Contain Special Needs Language

 Posted on October 17, 2022 in Estate Planning

A special needs provision should be included in every person’s Will or Trust. Not only does it protect loved one that has special needs at the time your Will or Trust is executed, but it also is effective in the event a loved one who was not disabled at the time but becomes disabled after the execution of the Will or Trust.

What Is a Special Needs Trust?

A special needs trust provides financial support for your loved one with special needs, while at the same time, does not disqualify them from receiving or continuing to receive any government benefits. This includes benefits like Medicaid and Social Security, which are often on an income contingency, meaning if you make over a certain amount of money, you can be disqualified from receiving those benefits.

How Do You Set Up a Special Needs Trust?

A special needs trust is included in your overall Trust document or in your Will. It is helpful to have an experienced and specialized attorney assist you with setting one up. This way, you can be sure that any personalization is tailored to your specific circumstances. The purpose of a Trust, in simple terms, is to assign someone (called the trustee or executor) to manage what you have decided to put in it, upon your passing. The person you decide to assign is legally bound to the terms you specify in your Trust and must carry it out exactly as it has been written by you.

The special needs provision specifies that if a person you have named as a beneficiary to your Will or Trust is determined to be disabled and qualifies for any governmental “needs based” program(s), your trustee has the authority to take proceeds from your estate and distribute them to the disabled individual into a special needs trust, where that beneficiary’s assets may be deposited. The language in this provision also specifies that the Trust is to protect and preserve the governmental benefits which the beneficiary is receiving (or is qualified to receive in the future) while at the same time being able to derive any funds provided.

Are There Qualifications for Who Can Create a Special Needs Trust?

There are no limitations on who can create and contribute to a special needs trust. There is also no limit to the number of trusts that can be created for one disabled person. There are two major types of Special Needs Trusts. The first major type is a Third-Party Special Needs Trust or otherwise known as a “Supplemental Trust.” This type of Special Needs Trust is set-up by a parent or grandparent during their life or upon their death. This type of Special Needs Trust is protected and any assets upon the death of the disabled adult goes to the family members (as described in the Trust).

The second major type is funded by the disabled person’s own assets. This type of Special Needs Trust is also called a Payback Trust because any assets that the disabled person used must be paid back to the government prior to any distributions to any family members (after a death of the disabled person).

There is no limitation on what can be held in a special needs trust. Often, the types of property that are put in the special needs trust are:

• real estate,

• stocks,

• businesses,

• jewelry.

There is a straightforward process for getting the assets into the special needs trust. This can be done by leaving the assets through a Will, or Revocable Living Trust, with a special needs provision.

Limitations For Using the Assets/Funds

Unless otherwise specified by you in the special needs trust, the assets provided in the special needs trust can be used for anything. Typically, it is used for anything that betters the quality of life of the disabled beneficiary. Often funds from the assets are used for things such as:

• therapy,

• caregivers,

• common bills (such as utility bills, phone bills, etc.),

• clothing,

• furniture,

• everyday household items.

Creating Your Special Needs Trust: Kendall County Special Needs Trust Lawyer

No two situations are the same. It is important to have a special needs trust regardless of whether you have a loved one with the disability at the time you are executing the Will or Trust. The special needs trust applies to those who become disabled even after you have executed the Will or Trust. It is crucial that you have a knowledgeable and experienced attorney to help you in designing your Will and Trust.

Yorkville and Kendall County Special Needs Trust Attorney for Disabled Adults

Peace of Mind Asset Protection, LLC concentrate in special needs trust and estate planning. Our estate planning lawyers and staff utilize innovative estate planning and asset protection strategies to protect the economic security and peace of mind of our clients. We are eager to assist you and your family with their estate plans. We are enthusiastic about helping families to protect their assets and create a legacy plan. Call us today or fill out an online form.