People With Special Needs Need Special Needs Trusts
You are so aware of the needs of all your loved ones. When a loved one has special needs, due to a disability or an injury, they need special care. A special needs trust can help ensure that your loved one has the quality of life they deserve and the finances to make sure they are cared for after you are gone.
Defining A Special Needs Trust
A special needs trust (SNT), is sometimes called a supplemental needs trust. It is a legal arrangement designed to provide for the financial needs of individuals with disabilities while preserving their eligibility for government benefits such as Medicaid and Supplemental Security Income (SSI).
Its primary purpose is to provide care for and enhance the quality of life of a disabled person by supplementing, rather than replacing, government benefits and other sources of income. It allows funds to be used for expenses that improve the beneficiary’s quality of life without jeopardizing their eligibility for means-tested benefits.
Typical Reasons For Creating a Special Needs Trust
Your disabled loved one probably relies on Medicaid and Supplemental Security Income (SSI) to cover essential healthcare and living expenses. These programs have strict asset and income limits. If a special needs beneficiary receives an inheritance outright, they can lose their eligibility for these necessary services. A special needs trust allows the beneficary to receive financial support through an intermediadairy who holds and manages trust assets for theit benefit, without jeopardizing their access to services.
Many special needs loved ones have physical, mental, and emotional needs requiring ongoing care and support throughout their lives, including medical expenses, therapy, assistive technology, housing, transportation, and other daily living expenses. A special needs trust can ensure that funds are available to cover these needs for the beneficiary’s lifetime, even after the death of their parents or other caregivers.
Many special needs individuals are unable to manage their own finances. An outright inheritance or legal settlement can be problematic for these people. Assets need to be properly managed to ensure that they meet the beneficiary’s ongoing needs. Placing these assets into a special needs trust can protect the benefiaciary and the assets, especially from third party exploitation and from mismanagement. A Tulsa special needs trust attorney can help you set up this valuable tool for your loved one.
Types of Special Needs Trusts
A third-party special needs trust is established and funded with assets belonging to someone other than the beneficiary. Often the parent or grandparent is the grantor. The trust can be created during the grantor’s lifetime or through a will or trust document upon their death.
In other situations, a first-party special needs trust can be used. Also known as a “self-settled” or “d(4)(A)” trust, this tool is established and funded with the disabled individual’s own assets. These funds can be the resul of a legal settlement, inheritance, or other windfall. Medicaid payback provisions apply to this type of trust, meaning that upon the beneficiary’s death, any remaining trust funds must first be used to reimburse Medicaid for benefits received by the beneficiary during their lifetime.
Some Things to Think About
Special needs trusts in Oklahoma must comply with state and federal laws governing trusts and public benefits programs. It’s essential to ensure that the trust document is carefully drafted to meet these requirements and address the specific needs and circumstances of the beneficiary. This often requires the use of a Tulsa trust attorney.
As you are planning, you want to choose a trustworthy and capable trustee. The trustee has fiduciary responsibilities to manage the trust assets prudently and make distributions according to the terms of the trust and the beneficiary’s best interests.
Special needs trust funds can be used to pay for a wide range of goods and services that enhance the beneficiary’s quality of life, including medical and dental expenses not covered by government benefits, education, transportation, housing expenses, personal care attendants, recreational activities, and more. The trust document may outline permissible uses specifically or generally.
Trustees of special needs trusts have reporting obligations, including providing accountings to beneficiaries and submitting required documentation to government agencies to demonstrate compliance with trust rules and regulations.
In Oklahoma, Medicaid may seek reimbursement from the assets of a deceased beneficiary’s special needs trust for benefits provided during the beneficiary’s lifetime. Proper trust drafting and administration can help minimize estate recovery efforts. As laws change, it is important to have your trust documents revewed by a Tulsa trust attorney on a regular basis.
By designating a trustee and outlining specific instructions for the use of trust funds, families can ensure continuity of care and peace of mind knowing that their loved one’s needs will be met even after they are no longer able to provide direct support.
By understanding these key aspects of special needs trusts in Oklahoma and seeking appropriate legal guidance, families can create effective estate planning tools to provide for loved ones with disabilities while preserving their access to vital government benefits.
Consult With a Tulsa Trust Attorney
Bring us your questions and let’s see what we can do to help you reach your goals. We are here for you at Oklahoma Will & Trust. To make an appointment for your consultation, call (918) 876-4500. A skilled and sympathetic estate planning attorney can help you take care of your loved ones and reach your estate planning goals.