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Compassionate. Convenient. Comprehensive.

Compassionate. Convenient. Comprehensive.

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Special Needs Planning

On Behalf of | Oct 14, 2019 | Estate Planning |

Let’s cover some of the FAQs of special needs planning to get you started.

What is a Special Needs Trust? 

A special needs trust, sometimes also referred to as a supplemental needs trust (SNT), is a specific trust established for the care and benefit of an individual, often someone who would struggle to care for themselves without a parent, guardian, or other caregiver present. This kind of trust is meant to grant funds for the individual’s continued care and quality of life should the grantor pass before the beneficiary. An SNT is designed to allow the beneficiary to continue to receive the benefits they receive from any state or federal program while also maintaining a decent quality of life.

Who Could Need a Special Needs Trust? 

The most common use of a special needs trust is by a parent, guardian, or caregiver on behalf of a special needs child or other family member. However, a special needs trust isn’t limited to children or younger family members. A trust could be established for an elderly parent, an extended family member, or other such individual who could need someone else to manage their funds for them.

Are There Reasons to Not Use a Special Needs Trust? 

Typically a special needs trust is meant to improve the quality of life of the beneficiary and cover items termed “luxuries,” such as tuition, travel, activities, and more. It is not meant to pay for daily expenses or living expenses such as rent or mortgage, healthcare, or meals. If distributions are distributed directly to the beneficiary or used to pay for these kinds of items, the funds could then count as income for the beneficiary, which could hurt them at tax time. This isn’t a reason to avoid using a special needs trust, but it is something make sure you’re aware of from the beginning and avoid spending trust distributions on such basics.

October is Special Needs Planning Month, so mark your calendars every October as a reminder to review and update any plans. A great resource to check out is the Special Needs Alliance, an organization with a great deal of information and resources to learn more about special needs planning overall.