Special Needs Trust
Children with special needs, or who developed special needs or disabilities after birth due to an accident or injury, typically need someone to handle their financial affairs. If this is your circumstance, you have specific considerations when it comes to your estate planning needs. Parents of special needs children need to ensure that their children will be taken care of properly. A Special Needs Trust (SNT) provides parents this comfort. As with any type of estate planning documents, there are some advantages and disadvantages to an SNT.
SNTs are usually created for children who are unable to live independently for the rest of their life or handle their own finances. There are several advantages to this type of trust including:
- Children will remain eligible for financial assistance from SSI or Medicaid, and the SNT helps fund any care that is required above and beyond what is provided through these government services.
- Funds from an SNT are used to take care of the child with a disability. This helps ensure that a child is not taken advantage of by a person looking to manipulate your child for financial gain.
- The funds from an SNT are tax-deductible. over what the government will provide.
- The funds will be deductible from taxes.
- These funds in an SNT are only available for the care of your child and never used to pay any judgments regarding your creditors.
Some of the disadvantages or challenges with the creation of an SNT include the following:
- The costs to create an SNT are higher and include a fee to establish as well as an annual fee. Additionally, there are specific minimum threshold amounts needed to start an SNT. These fees may make an SNT cost-prohibitive for certain families.
- Your child will have to ask for any necessary funds from the trustee who oversees the SNT. This trustee will have complete discretionary control over the funds in the SNT. While this may frustrate some children, the benefit is that their financial security will be established for the rest of their lives.
- Medicaid must be repaid in the exact amount that Medicaid is paid out on the child’s behalf. Unfortunately, this may completely wipe out the SNT after the child’s death or when the trust is legally terminated.
Contact an Estate Planning Attorney
If you have a special needs child, you have many different considerations regarding your estate planning needs. Contact an experienced estate planning attorney at the law firm of Giro Law at 201-690-1642 to help you understand the best options for your unique situation.