Special Needs Planning Attorney Serving Pheonix, Arizona and its surroundings.
Leaving a bequest to someone with special needs isn’t as easy as including them in your traditional will or trust. A distribution of funds from an estate could inadvertently disqualify you or your loved one from government benefits.
At Copper State Planning, we have years of experience to help you establish a special needs estate plan that not only determines how your assets are passed on, but also includes safeguards for your heirs who may have special needs. We’ll go over the differences between a first party special needs trust and a third party special needs trust, which trust is needed in your situation, and offer guidance in naming the contingent beneficiaries.
Isn’t a Will or Trust Enough?
If you have a loved one with special needs or may need governmental assistance in the future, including special needs provisions allows you to protect your bequest and gives them a way to live life with more than just the bare minimum essentials.
Government benefits such as Medicare, Medicaid, ALTCS, Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), and VA Benefits will not cover “non-essentials” such as an assistant, clothing, dental care, wheelchairs, the ability to visit family and more.
Your circumstances and family situation are unique. Speak with an attorney who specializes in these types of trusts to explore all of your options during an initial consultation.
Who Needs a Special Needs Estate Plan?
Given the fact that including special needs trust language in any third party trust is extremely easy, any multi generational plans should include such language. But if you aren’t planning on leaving your estate in trust instead of outright, you may want to consider a special needs estate plan if you have a loved one with a disability or a child who will need government benefits or in-home assistance due to autism, Down syndrome, or other special needs. Perhaps you or your spouse has a family history of Alzheimer’s, Parkinson’s, or ALS.
If you have any of the above concerns or family needs, a special needs estate plan is the best way to preserve your assets and your loved one’s ability to access government benefits and maintain their quality of life. The rules, regulations, and laws surrounding benefit eligibility are complex and it’s an all or nothing game. As such, a special needs trust is best drafted by an experienced attorney with a strong knowledge base and experience.
What is a Third-Party Supplemental Needs Trust?
A third party supplemental needs trust, also known as a special needs trust, is a trust setup to benefit a beneficiary who qualifies or may qualify for government benefits. The third party trust is created and funded by a person other than the beneficiary, usually a parent or other family member. These trusts are relatively straightforward to create as there are fewer limitations on how the trust can be structured and the beneficiary still qualifies for public benefits such as Medicaid and supplemental security income (SSI).
What is a First Party Supplemental Needs Trust
A first party supplemental needs trust, also known as a special needs trust, is a supplemental needs trust created and funded by the beneficiary him/herself. First-party special needs trusts also are commonly called self-settled special needs trusts, Medicaid payback trusts, OBRA ’93 trusts, and d4A or d4C trusts. These trusts are much more complicated and require a deep knowledge of the state benefits systems. A common feature these trusts typically require is a payback provision upon the beneficiary’s death. Another requirement is a limit on distributions and who may benefit from the trust.
First party trusts are federally authorized under 42 U.S.C. § 1396p(d)(4)(A). They allow the settlor to benefit from the assets within the trust and not risk losing their access to government benefits. While most first party trusts may be created without court involvement, in some situations court approval is necessary.
Talk to a Special Needs Trust Expert for More Information
If you or a loved one has or may develop special needs or require government assistance, talk to a Phoenix special needs trust attorney today. Both first-party and third-party special needs trusts must be drafted properly in order to maintain the right to receive government benefits. In addition, there are a myriad of tax issues to consider when creating these trusts. Discussing which type of supplemental needs trusts is appropriate with an attorney proficient in special needs planning is paramount in order to best protect one’s access to government benefits.