The Special Needs Trust is a useful and sometimes necessary estate planning option for individuals who have a child that has a mental, social or emotional disorder. These children will often never be financially independent and the concern for most parents is the inevitable situation when the parents die before their child. Parents often have to think about where will the child live; who will take care of the child; and where will the money come from?
Parents of a special needs child often take the time to seek out the best medical care, advocate for the child’s educational setting, seek financial assistance through various government programs, and raise their other children. Parents do this while often holding down a job. What often gets overlooked is the actual future planning for the child. Parents often fear that the situation is complicated and too difficult to sort out, or they believe that another sibling or family member will take of the child, or perhaps they are just too busy to carefully plan for the future. For parents with a special needs child, the solution is the Special Needs Trust. How does a parent create a Special Needs Trust in Pennsylvania?
Estate Planning Attorney Tip #1 – Hire an attorney
The first thing the parent(s) must do is contact an estate planning attorney in Pennsylvania. Most general practice attorneys provide estate planning services. Some law firms have separate departments to do estate planning. Regardless of the size of the law firm, parents should find an estate planning attorney who has experience drafting the Special Needs Trust. The trust has to be carefully drafted to take advantage of all of its benefits as set forth below. Finding an attorney who can draft the trust to accomplish your goals is the first and most important step in the process of creating a Special Needs Trust.
Estate Planning Attorney Tip #2 – Consider the trust options
A parent should also consider whether to create a separate Special Needs Trust document or as an alternative, create the trust within the parent’s Last Will and Testament. The former is referred to as an inter vivos trust and the latter is considered a testamentary trust. Both types of trusts can work well, but discussing the options with an estate planning attorney can help you understand how both trusts work so that you can decide which is better for you and the child.
Estate Planning Attorney Tip #3 – Preserving Government Benefits
Perhaps the most important function of the Special Needs Trust is to preserve the child’s eligibility for medical assistance through Medicaid and Social Security. When a child qualifies for Supplemental Security Income (SSI), it means the child has a physical or mental condition that results in severe limitations for the child. It also means that the child has very limited income and resources. Under the Medicaid program, the child also must meet stringent income and resource guidelines. A properly drafted and funded Special Needs Trust will not disqualify the child from receiving these benefits. The funds in the trust can then be used to supplement the benefits the child already receives through these government programs.
Estate Planning Attorney Tip #4 – Name a Trustee
The Special Needs Trust must be managed by a person or entity known as a “Trustee”. A Trustee is tasked with managing the trust assets, investing, and using the trust resources for the trust’s intended purpose. A Trustee is a fiduciary, meaning that he/she/it holds a legal and ethical relationship and must prudently act for the benefit of the child. Family members are often named as Trustees. Family members usually know what the child needs or wants and family members often have an inherent ability to act in the best interests of the child. Corporate fiduciaries are an option. They often have experience managing the Trust; however, corporate fiduciaries usually charge high fees for serving as a Trustee.
Estate Planning Attorney Tip #5 – Name a Guardian
Even though a guardian is not named in the trust document, a guardian should be named in the Last Will and Testament of the parent(s) when also considering a Special Needs Trust as part of the estate plan. A “guardian of the person” is someone who is designated by the parent to take care of the child when the parent dies. For children with special needs, naming a guardian should be given careful consideration. A guardian should be someone who has the time to devote to the special needs child. The guardian should be someone who is responsible, loving, caring and compassionate. When a parent creates the Special Needs Trust, the trust can serve as the financial protection for the child. By providing the financial security through the trust, preserving the government benefits, and naming the proper guardian, a parent with a child who has special needs can feel comfortable and secure knowing that the planning is in place to ensure a good life for the child.