Planning for the future of a loved one with special needs involves careful consideration. One essential tool that can ensure their financial stability and quality of life is a Special Needs Trust (SNT). This legal instrument allows individuals with disabilities to receive funds without jeopardizing their eligibility for public benefits.

Understanding Special Needs Trusts

An SNT is a trust arrangement that allows individuals with physical or mental disabilities or chronic illnesses to access supplementary resources. The significant benefit lies in the fact that assets held within the trust are not considered personal assets when assessing eligibility for means-tested public benefits like Medicaid or Supplemental Security Income (SSI).

Benefits of a Special Needs Trust

Establishing an SNT offers myriad benefits, from preserving public benefits eligibility to providing supplemental care and enhancing the quality of life for the beneficiary.

Preserving Eligibility for Public Benefits

One of the main benefits of an SNT is preserving the beneficiary's eligibility for public benefits. By holding assets in trust, they do not count as personal assets, thus not affecting the beneficiary's qualification for means-tested benefits.

Providing Supplemental Care

The funds in an SNT can be used for a wide range of expenses not covered by public benefits. These may include personal care attendants, out-of-pocket medical and dental expenses, education, recreation, and physical rehabilitation.

Enhancing Quality of Life

Beyond covering necessary expenses, an SNT can also improve the beneficiary's overall quality of life. The trust can fund experiences like vacations, trips to concerts or sporting events, purchases of electronics, and more. 

Getting Started with Special Needs Trust Planning

Creating an SNT involves several steps, all of which require careful thought and planning.

Identify the Type of Trust

There are three types of SNTs: First-party, Third-party, and Pooled trusts. Each has its own set of rules, benefits, and drawbacks. Analyze the specific needs and circumstances to determine the most suitable type.

Choose a Trustee

The trustee has the responsibility of managing the trust. This can be a family member, friend, or a professional trustee. The chosen individual or organization should be trustworthy, competent, and knowledgeable about the beneficiary's needs.

Fund the Trust

The final step is to fund the trust. Assets can be transferred into the trust during one's lifetime, or they can be directed to the trust upon one's death.

Planning for the future of a loved one with special needs is a task that carries great responsibility. A Special Needs Trust is an invaluable tool that can ensure a secure financial future and improved quality of life for the beneficiary. By considering the unique needs and circumstances, families can create an effective plan that provides for their loved ones while preserving their eligibility for essential public benefits.

Contact a company such as Elder Law of Nashville to learn more.