SPECIAL NEEDS TRUSTS
Having a child with special needs can be both a challenging and rewarding experience. As parents, it is important to make sure that your child with special needs is taken care of physically, emotionally, and financially. One way to ensure this is through a special needs trust. A special needs trust allows you to provide for your child without interfering with their eligibility for government benefits.
Our experienced estate planning attorneys in Dublin, OH can help you set up a special needs trust and give you peace of mind knowing that your child's future is protected.
What is a Special Needs Trust?
A special needs trust is a legal vehicle that holds assets so they're not counted as part of eligibility for public benefits. A knowledgeable estate planning attorney can put language in your trust that states that if the presence of the fund ever causes your loved one to not be qualified for government assistance they would otherwise be entitled to, the trust essentially "blows up". The funds that would go to the special needs person will then be distributed among your other beneficiaries. This can be your other children, siblings, etc. Those people can then take care of the disabled person in a more informal fashion.
For efficiency's sake, the special needs trust can live within a larger trust. This way, you can accomplish most, if not all, of your estate planning goals in one trust. That way you won't have multiple confusing documents floating around.
What Can the Money in a Special Needs Trust Be Used For?
Trust assets can be used to pay for living expenses, educational costs, medical expenses, and other things your loved one needs.
Why Do I Need a Special Needs Trust?
People with special needs may be eligible for a variety of government assistance programs. However, having too much income or assets can disqualify them from receiving benefits.
Medicaid Eligibility Requirements
Medicaid is a government program that provides health and long-term care coverage to people with low-income, special needs, and disabilities. It can help cover medical expenses, special education services, home and community-based services, therapies, assistive devices, and more.
To qualify for Medicaid, special needs individuals must meet specific eligibility criteria. This includes having a low income, limited resources, and/or certain physical or mental impairments. You can stay up to date on Ohio's current requirements for Medicaid here. It's important to be aware of eligibility criteria so your loved one keeps their benefits.
Social Security Eligibility Requirements
Social Security provides support for individuals with disabilities through its Supplemental Security Income (SSI) program.
Individuals with special needs may be eligible for additional benefits and programs through Social Security, including special education services, job training programs, and grants to help cover medical expenses. It's important to explore all available options.
Keep up-to-date on available benefits for children with disabilities here.
Keep up-to-date on available benefits for adults with disabilities here.
How Does a Special Needs Trust Work in Ohio?
Typically, a guardian of the estate creates a special needs trust for the disabled person. The special needs trust must be properly established, funded, and managed to ensure the beneficiary doesn’t lose government benefits. In some cases, you may need to involve the probate court.
Pros and Cons of a Special Needs Trust
There are many benefits to having a special needs trust. Here are just two of them:
Protection of government benefits: A special needs trust can protect the beneficiary's eligibility for Medicaid and Supplement Security Income (SSI).
Preservation of assets: By creating a trust you help ensure that the funds inside the trust are used the way you want. A special needs trust can also help preserve assets for future needs.
Like all trusts, there are certain drawbacks as well:
Lack of access to funds: Depending on the terms of the trust, the beneficiary might not have direct access to funds, which can limit their financial independence.
Complexity: Special needs trusts can be complex legal documents and may require ongoing management and administration, which can be challenging for some families.
How a Special Needs Trust Fits in with the Rest of Your Estate Plan
A Special Needs Trust is just one important part of an estate plan. A complete, sound estate plan consists of five documents:
A will that provides instructions on how to distribute probate assets (house, car, valuables, etc.)
A trust (or multiple trusts) that hold those assets.
Advance directives that identify what medical care you would and would not like to receive if you become incapacitated
A medical power of attorney that designates someone to make medical decisions for you if you become incapacitated
A financial power of attorney that designates someone to handle your finances if you’re unable to
These documents should be updated when major life events happen, or at least once every 5 years.
Difference Between a Power of Attorney and a Guardianship
Many people confuse a power of attorney for a guardianship. Both are important for folks with special needs.
A Healthcare Power of Attorney (POA) grants someone you trust the legal right to make health and medical decisions for you if you’re unable to do so. This type of POA is especially beneficial for someone with special needs or disabilities, as it can help ensure they receive the care and treatment they need even if they can’t communicate their wishes themselves.
A Financial Power of Attorney (POA) grants someone you trust the legal right to make financial decisions on your behalf. This type of POA can cover decisions related to banking, investments, taxes, real estate transactions, special needs trusts, and more. This document comes into play when a person cannot make financial decisions for themselves.
While POAs are relatively simple documents that can be drafted by an estate planning attorney, guardianships must go through the probate court. A guardianship gives an individual or organization the responsibility and authority to make decisions on behalf of someone else. The guardian ensures that the ward’s rights and resources are respected and protected. This guardian will be responsible for making decisions regarding the ward’s day-to-day care and well-being, as well as their financial needs and well-being.
In some instances, no family member or friend is able to serve as guardian. In those cases, there are many volunteer organizations throughout Ohio that can help.
Types of Guardianship
A guardian of the person makes healthcare decisions and ensures daily needs are met
A guardian of the estate manages property and financial assets
A guardian of the person and estate does both
How Can I Help My Special Needs Child Become Financially Independent?
As parents, we want what's best for our children. We want them to learn, grow, and become as independent as possible. This process may look a bit different for special needs children.
Some families want to be continuously involved in their child's financial life, others do not or cannot. Fortunately, there are services out there that can help your adult child manage their money.
At DuPont and Blumenstiel, we have a trusted relationship with a local payee service called Best Payments. As a payee service, they are approved by the Social Security Administration to receive benefits on behalf of someone who cannot manage their own money. Best Payments then distributes funds to pay for rent, utilities, groceries, medical expenses and other basic needs. By collaborating with The Social Security Administration, Best Payments provides a safety net for you and your loved one.
Contact Our Estate Planning Attorneys in Dublin, OH to Create a Special Needs Trust
Having special needs doesn't mean your loved one can’t be financially independent. With the right planning and resources, special needs individuals can have a financially secure future. At DuPont and Blumenstiel, we specialize in estate planning for special needs individuals. We're here to help you create special needs trusts that provide for your loved ones long-term.
Call us at 614-389-9711 to schedule an estate planning consultation.
GREGORY S. DUPONT, JD, CFP
Greg DuPont, JD, CFP®, is a well-respected estate attorney, financial advisor, public speaker, and published author. He has been serving clients as an estate and tax planning attorney since graduating from Capital University Law School in 1992 and added a wealth component to his practice over 15 years ago. He designed his firm to be the place where finance and law meet. He has been named one of Ohio’s Top 100 lawyers and was also recently named an Ohio Super Lawyer. Greg has been featured on WTVN radio and WCMH television. He is a life-long resident of Central Ohio and resides in Hilliard with his wife, Julia, and his daughter, Sophie.