Trust important part of life care plan for special needs loved one

By Andrew Zashin*

If you have a loved one with special needs, a trust could be a very important part of his or her life care plan. Generally speaking, a trust is created when someone manages property – usually money or real estate – for another person.

We often think of trusts as estate planning tools to conserve wealth for future generations. In the case of a special needs trust, the beneficiary or the person for whom the trust is created, is someone who is disabled or mentally ill and who lacks the capacity to manage his or her own finances.

This type of trust is intended to provide ongoing financial support for the beneficiary’s specific medical and lifestyle needs. And, it provides you with assurance that your loved one will be cared for when you are no longer able to do it yourself.

The definition of special needs is rather broad. Not only can a special needs trust help with medical and health care services and products, but it can be used for daily living needs such an accessible vehicle, modified communication devices or appropriate living arrangements like an assisted living or skilled nursing facility.

This money can fund recreational activities, hobbies and activities, or vocational activities, training and education for the beneficiary. It can be used toward professional services such as claims processing, attorneys, and accountants that may be hired to act on behalf of the beneficiary. Trust funds can even be used to provide for respite care for a caregiver.

The trustee typically will be a family member such as a parent or a sibling. But, if no appropriate family member is available, a third party can be appointed by a court. The trustee is tasked with smartly managing the funds or other assets, balancing the immediate needs and wants of the beneficiary against expectations that the funds will be used frugally so as to be available to provide for the beneficiary as long as possible. After all, the trust will generally continue on until either the beneficiary dies or the funds are exhausted.

Funding of the trust will vary widely, based on the available assets and the particular needs of the beneficiary. There is no minimum requirement for a special needs trust, and it can be funded with thousands of dollars, or millions. Generally, the funds will come from family assets, lawsuit proceeds, life insurance policies on the lives of the beneficiary’s parents, inheritances, etc.

Often, a prospective beneficiary qualifies for means-tested government assistance, i.e. assistance that is based on a recipient’s lack of resources, such as Supplemental Security Income, Medicaid, subsidized housing and the like. Special needs trusts are especially useful in those cases; with proper planning, the trust can subsidize expenses for a beneficiary without jeopardizing access to other benefits.

If you are looking to create a special needs trust for a loved one, it is imperative to get the right team behind you. A special needs trust is not something to do once and never look at again. Instead, you will want to work with a competent estate-planning attorney, and possibly a financial planner, to make sure the trust will continue to accomplish your goals for your loved one well into the future.

This article originally appeared as a column for the Cleveland Jewish News.