As the parent or caregiver of a special needs child you undoubtedly already realize that the costs involved in caring for your special needs child can be high. Fortunately, there are numerous state and federal assistance programs that provide financial and other assistance to special needs individuals to help defray those costs. If you plan to supplement the assistance provided by these programs when your child is an adult care must be taken in the methods you use to provide that assistance to avoid jeopardizing your child’s eligibility for assistance. One answer is to create a supplemental needs trust.
Also referred to as a “special needs trust”, a supplemental needs trust is a specialized trust that can be used to provide “supplemental” care to a special needs individual above and beyond the care provided by state and federal assistance programs such as Medicaid and Supplemental Security Income (SSI). Eligibility for these much needed programs is determined, in part, by an applicant’s income and assets. Once your special needs child reaches the age of majority (18) any assets held in his/her name could prevent your child from qualifying for assistance from programs such as Medicaid or SSI. For this reason, simply gifting assets to your child will not work.
Instead, the creation of a supplemental needs trust allows you to accomplish your goal of providing financial assistance to your child without jeopardizing ongoing eligibility for assistance. A supplemental needs trust operates in much the same way as any other trust; however, very precise language must be used in the creation of the trust for the federal government to recognize the trust as a supplemental needs trust. For this reason, consultation with your South Carolina estate planning attorney is essential before creating your trust.
When a supplemental needs trust works as intended it provides funds that can be used to pay for things such as vacations, transportation, and numerous other things your special needs child may need. There are also certain things a special needs trust cannot be used to pay for though, making it even more important to understand the rules regarding a special needs trust if you intent to create one.
Once your special needs trust is in place you should explain to all well-meaning family members that any testamentary gifts intended for your child should be directed into the trust, not gifted directly to your child, to ensure that the gifts do not jeopardize ongoing eligibility for assistance programs.
If you have additional questions or concerns about special needs planning or estate planning in general, contact the experienced South Carolina estate planning attorneys at Kuhn & Kuhn Law Firm by calling 843-577-3700 to schedule your appointment.