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Biddle Law Estate Planning Blog

Wednesday, October 9, 2019

What Is a Special Needs Trust?

We execute estate plans so that during our lifetime and upon our incapacitation or death we can best provide for our loved ones and ourselves. A big reason for this is to be sure that we can provide for our loved ones after we have gone. This is even more important when we have a child or loved one who is disabled. 

The government treats all individuals with disabilities as adults once they turn 18. However, an individual who becomes disabled prior to the age of 22 is entitled to receive Social Security Income (SSI) benefits as long as the worth of their assets remains under $2,000 and their income remains lower than the amount of money they would receive in SSI benefits. 

What Is a Special Needs Trust?

While we understand the importance of a Trust, we also need to be aware of a special type of trust known as a Special Needs Trust, or sometimes, a Supplemental Needs Trust. A Special Needs Trust can be held within a Revocable Living Trust or can be established as its own entity. Others are then able to contribute by making annual gifts or they can do so through their own Living Trust.

However, there are some real differences between an average Trust and a Special Needs Trust. A Special Needs Trust is intended to provide for various needs. SSI benefits serve to provide food and shelter. The Special Needs Trust’s trustee is allowed to purchase things, such as wheelchairs, caregivers, vans, computers, and toiletries for the beneficiary of the trust, without even reducing the SSI benefit. 

If the trustee provides the beneficiary with food or shelter, their SSI benefit will be reduced, though not eliminated. However, if an individual is also the beneficiary of a retirement plan it could also serve to reduce or eliminate their SSI benefit. Receiving an inheritance also impacts the recipient, who will lose benefits until all of the money is spent. 

Biddle Law Helps Those in California Who Need a Special Needs Trust

Special Needs Trusts can be extremely beneficial, but it is very important to design one in a manner that is most protective of the beneficiary with the disability. In order to do so, it is necessary that we understand how the SSI benefit works and how to make distributions in a manner that will not impact the benefits. 

To best execute a Special Needs Trust, it is wise to consult with a knowledgeable and experienced trust and estate planning attorney. At Biddle Law, we understand and respect your wishes as well as the consequences that estate planning can have on them. That is why we work to assist our clients in achieving their desired plan. We would love to help you to achieve your needs and wishes. To learn more or to schedule a consultation, contact us today!

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