Special Needs Trust

Discussion in 'Parent Emeritus' started by MICHL, Mar 8, 2011.

  1. MICHL

    MICHL New Member

    Has anyone done this, and it's a good thing? What is your experience with getting this started, etc? Gfg may need to apply for disability at 18-19, and I understand he can not have money in his name if he is to be approved. Any advice is appreciated. Thanks
     
  2. DammitJanet

    DammitJanet Moderator Staff Member

    I think Fran may have some info on this.
     
  3. slsh

    slsh member since 1999

    We are doing this w/ oldest. Basically, the special needs trust stipulates that before any funds from the trust can be used, all state and federal funding resources must be exhausted. That way, we can leave Boo $$ and it will not affect his eligibility for SSI/Medicaid, etc., but the funds can be used for things not covered by SSI, etc. You need to have it set up by an attorney who is *very* familiar w/ special needs trusts because if it's not set up correctly, those funds will have to be used before public funding can be used. Boo requires 24/7 care, so whatever amt ends up in his trust would get eaten up in a heartbeat if it has to be used first.

    Even though Ty is on SSI, we are not setting him up for a special needs trust. Our wills set trusts for our younger 3 kids that they cannot access until they're 45 or so (assuming we're dead by then - if not, oh well, they get it when we croak). To be honest, unless we win the lottery, there's not going to be a huge estate to leave anyway and if I recall correctly, I think we're leaving more for Boo's care than for the other 3.
     
  4. ctmom05

    ctmom05 Member

    We did this. In theory it's a great idea.

    We used an attorney who specializes in the areas of elder and special needs; recommended by a financial planner who's got a special needs child of his own. The attorney took the time we needed to help us make informed choices and was there for us afterwards when we had incidental questions. His fee of $600 came from the trust fund itself.

    The words "in theory" mean that the same emotional difficulties that often travel along with our kids can complicate the administration of the trust.
     
  5. rlsnights

    rlsnights New Member

    It's a very specialized area of the law and as Sue suggested you need an attorney whose practice is estate planning and even then not all of them are going to really know what they're doing. Asking how many they have set up and how many active trusts the attorney is advising may help you find a well qualified attorney.

    We have been trustee's for our GFG1's court-supervised special needs trust for 10 years. This is a different kind of SNT than you would set up yourselves. It is irrevocable and the funds came from the settlement of an auto accident when he was a minor.

    However, the function of the trust is basically the same as one you would set up for your disabled child with your own money.

    The purpose is to protect a certain amount of money for things that your disabled child may need in the future that would not be provided by state/federal programs like SSI, Medicaid, IHSS. Usually, for a medical service to be paid by the trust there must be evidence that the service has been denied for coverage by the appropriate agency. The trust can be set up at any time and is usually revocable up to the time of your death. After that, it is usually an irrevocable trust - no changes can be made in the way it is structured although trustees may be changed in the way that the trust document specifies.

    Things it can be used for include educational expenses like tuition and books, computers, home modifications required to meet the adult child's special needs, attorney or other professional fees associated with management of the trust, transportation including things like taxi fare or air fare, purchase and modifications to a vehicle that is specially modified to meet the disabled person's special needs, vacations, in-home care not covered by IHSS, small thank you gifts to caregivers, art supplies - anything pretty much that isn't food, clothing, shelter or medical care. You cannot pay most utilities but you can pay for telephone costs including cell phones. The costs for those things are expected to be covered by publicly funded programs like SSI or SDI, etc. The trust also specifies what will be done with the trust proceeds in the event of the adult child's death. However, if the adult child received Medicaid or Medicare the remaining trust funds must be turned over to pay the government back for the costs to provide your adult child's medical care. At least that's the way the law stands right now. It is not evenly enforced however.

    It is a good idea to create a SNT if you know or have reason to believe you may have a lump sum to leave to an adult child who you expect to be on SSI. If there is a lump sum inheritance or there is valuable property (except for a residence that the adult child will live in) or stocks inherited those will have to be liquidated and used up before SSI and other programs will kick in.

    It's actually a good idea for anyone with a special needs child to put in place because none of us can know the circumstances that will arise at the time of our death. Even if you don't have a big life insurance policy or lots of money in your 401 K, if you die in an accident that results in a substantial settlement to our estate then the adult child on SSI is likely to have a problem, particularly if you die without any will at all as the inheritance laws of the state will dictate who gets how much of your estate.

    It also gives you a lot of control over who is in charge of the money as the initial trustees and as successor trustees.

    Patricia
     
  6. Fran

    Fran Former Site Owner

    Because the future of my son is a question mark, we decided to use his pc brother to insure that gfg is not homeless or without medical care if we are gone. SSI helps with that at present although medicaid is a secondary since gfg has medical coverage with dh. Funds will dispensed by pc to handle things that are not covered by SSI.
    As time goes on, if gfg doesn't seem to be able to hold a job that will provide an income to make him independent we will make other arrangements to keep him from being in an unsafe living arrangement or unhealthy environment.
    PC will administer the funds but I have siblings who advise and support pc in his decisions.
    We have found that about every 3 or 4 yrs we have to change how things are arranged. Eventually, we will be able to make arrangements that will be more solid.
    I agree with the others, SNT, should be handled by someone who has experience with these arrangements. We heard many different explanations over the years of what this will and won't do or how to arrange it.
     
  7. svengandhi

    svengandhi Active Member

    You need to consult with an attorney who specializes in this area. My H had drafted a number of them and they are very tricky - if done wrong, the person you are trying to protect can wind up losing all of their benefits and having to exhaust the trust.

    In addition, nothing should be put in to their names. My gfg SIL is blowing a fit because MIL is leaving the house to H but her years of refusing to work and collecting welfare will keep her from keeping any money. MIL feels we can help her out a bit but why should money we could use for the children go to pay back SIL's debt.
     
  8. MICHL

    MICHL New Member

    Thanks for all the replies! I will print and keep it for reference. Our immediate concern is that GFG (Almost 16) has an account that was a "gift to minor"... Is the only way to keep it out of his hands when he turns 18 is to establish a SNT prior to age 18? Age 17? Does there have to be a "hearing" or conservatorship?? Anyone know any excellent SNT lawyers in San Diego?
     
  9. svengandhi

    svengandhi Active Member

    Contact your local bar association and ask for some referrals to lawyers who handle SNTs. Most attorneys will give you a short, complimentary evaluation...
     
  10. Fran

    Fran Former Site Owner

    You can also try to talk to the local autism group. They usually have names of professionals that the group has had experience with. I tend to get referrals from people who have used the attorney and had good results.
     
  11. DammitJanet

    DammitJanet Moderator Staff Member

    I have a question. Can I be my own trustee? Can I set up my own special needs trust for myself? I dont want to say much more.
     
  12. rlsnights

    rlsnights New Member

    No you cannot be your own trustee. You may be able to set up a trust for yourself but it must be administered by a separate trustee and you cannot have any control over the management of the trust. Once you put money into the trust and the terms of the trust are invoked (i.e. maybe it doesn't start until you are house-bound or placed in long term care) I believe it is irrevocable and you will have no direct access to the funds. That's the point of such a trust. Eligibility-based programs like IHSS or SSI will not count it as an asset because you do not have any control over the trust and because it is protected and can only be used for things that these programs will not provide.

    However, I am not an attorney and can only speak from my understanding of the law as it is practiced here in our area based on our personal experience. If you are seriously considering this then you will need to talk to an estate planning attorney in your region/state.
     
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