special needs trust

Special Needs Trust

Every parent has their child’s well being front and center in their thoughts each and every day. For those parents of special needs children, it is almost non-stop around the clock. Perhaps their greatest concern is, “what will happen to my child after I die?” At Phelps LaClair, we understand those fears. This is why we recommend establishing a special needs trust for their future and your peace of mind.

What is a Special Needs Trust?

It is a type of trust from which a disabled beneficiary can receive financial assets without endangering their qualification for government aid. While public benefit programs such as Social Security and Medicaid can provide for essentials, they don’t provide for much more than food, housing and clothing. A special needs trust (SNT) is a way to supplement government assistance for “luxury” items that these programs don’t provide. A properly drafted SNT will allow your loved ones to enjoy a richer quality of life.

Are there restrictions?

There are certain items that the government will not allow to be paid from an SNT without incurring a penalty. The government would rather you decide whether living expenses would be covered through either assistance or inheritance. Therefore, they may reduce the SSI benefits (supplemental social security income) by as much as one-third if you pay for living expenses using both SSI and SNT funds. These expenses include food, rent or mortgage, property taxes and utilities.

What can an SNT provide?

With an SNT, you can pay for your medical and dental expenses that are not covered under other programs. This would include wheelchairs, specially equipped vans, and rehabilitation services. It can also pay for recreational items such as sports equipment, social events, movies and videos. Educational expenses are permissible, as are computers and other electronic equipment. Travel expenses, including the cost of a companion; legal fees, and insurance are also allowed.

The SNT can buy a house, pay for a vacation, buy a car and pay for business startup expenses. The rules for SNTs are very complicated, however. Any trustee who is administering the trust should consult a special needs planner before making large purchase decisions. We can certainly do that for you. The main point is to make sure that the government benefits are not compromised.

Important considerations

The SNT you establish will be the means by which your special needs child will live as normal a life as possible. No matter their level of independence, the courts will likely consider them as a minor. Therefore, your SNT should establish savings and/or investment accounts for future financial stability. It should also appoint a guardianship or conservatorship, as well as designate durable powers of attorney for finances and medical needs. Finally, it should include end-of-life and burial arrangements for your child.


We Are Experts in SNTs

Phelps LaClair is a premier estate planning law firm serving Chandler, Mesa, Phoenix and Scottsdale. We have drafted a special needs trust for many of our clients. As lawyers, we understand the legal requirements and we have compassion for the emotional burden of special needs parents. We are here to serve you in establishing a special needs trust for your child. Give us a call for an appointment to discuss your needs and to help you find peace of mind for the future security of your child.



Images used under creative commons license (Commerical Use) 03/06/20   Photo by Amanda Kirsh from Burst

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