What is Special Needs Planning?

Special Needs Planning refers to estate and long-term care planning for people with disabilities. Special Needs Planning encompasses a broad range of issues, including: Special Needs Trusts, eligibility for government benefits, taxation (e.g. estate, gift, income), and guardianship issues. Effective planning also requires a familiarity with the various state and local organizations that can provide care and support in communities throughout Vermont.

Why is this all so important to think about now? Can’t it wait?

As parents, we all want our children to live long and happy lives. As difficult as it is to think about dying before our children with special needs, we must. Establishing a special needs trust is one of the best strategies to provide financial security for persons with a disability and/or personal injury victims. A well-drafted special needs trust makes it possible to set aside funds – such as a gift, inheritance, or a legal settlement – for a disabled or injured person without jeopardizing that person’s current or future potential government benefits.

By creating a trust, these funds can be used to supplement government benefits, and generally not replace them. Since the special needs trustee is given sole and absolute discretion over the management and distribution of the funds, such funds can be used to pay for items designed to enhance the quality of life of the beneficiary, such as wheelchairs, handicap-accessible vans, mechanical beds, personal attendants as well as recreational and cultural experiences.

What’s so different about planning for the future of someone with special needs?

In addition to “traditional” estate planning, planning for families of children and adults with special needs includes:

  • Comprehensive planning for the extended family
  • Third-Party Special Needs Trusts
  • OBRA 93/First-Party/Medicaid Payback Trusts
  • Guardianship & alternatives
  • Planning for “post 18” support and benefits
  • Coordination of beneficiary designations
  • Counsel regarding availability of present benefits, services and programs

Do I need a Trust?

A Special Needs Trust is usually necessary only if the person is receiving Medicaid, SSI or other means-tested government benefits. Small settlements or inheritances may not warrant the establishment and administration of a trust. Other ways can be found to shelter the funds. Even if a person is not currently receiving benefits, a trust needs to be considered if there is a possibility that s/he may receive means-tested government benefits in the future.

Who should be in charge of the Trust?

A professional trustee is often the best arrangement. The professional trustee must be sensitive to the needs of the beneficiary and must be knowledgeable about government benefits. However, in many circumstances immediate or extended family members serve as trustees, co-trustees or trust protectors.

When is a “Medicaid Payback” Trust required?

A Medicaid Payback Trust is required only if the funds being used to establish the trust are those of the trust beneficiary. Cases involving personal injury settlements or inheritances fall under this category. If a parent’s or grandparent’s funds are used to establish a trust for an individual with disabilities, a payback provision is not required.

Can a Special Needs Trust buy a house?

Yes. A Special Needs Trust can buy a house and there are often good reasons to do so. However, the decision depends on the specific circumstances of a particular beneficiary. There are also state and federal regulations that may need to be considered before making that decision.

Can a Special Needs Trust buy an automobile or van?

Yes. A Special Needs Trust can buy an automobile or a van. However, it is often better for the trust to lease the vehicle.

Can a Special Needs Trust pay for vacations?

Yes. A Special Needs Trust can pay for vacations.

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