Can the beneficiary of a Special Needs Trust have access to the funds directly?
No, the beneficiary of a Special Needs Trust cannot have direct access to the funds. Instead, a trustee manages the funds and uses them to pay for the beneficiary’s expenses.
What happens to the funds in a Special Needs Trust when the beneficiary dies?
When the beneficiary of a Special Needs Trust passes away, any remaining funds are typically used to pay back the government for any benefits that were received during the beneficiary’s lifetime. After that, the remaining funds can be distributed to other beneficiaries or charities, as specified in the trust document.
Can a Special Needs Trust be used in combination with other planning tools?
Yes, a Special Needs Trust can be used in combination with other planning tools, such as a will, life insurance policy, or retirement account. An estate planning attorney can help ensure that all the planning tools work together effectively to support the beneficiary’s needs.
Who can be the trustee of a Special Needs Trust?
Typically, a trusted family member, friend, or a professional trustee can serve as the trustee of a Special Needs Trust, responsible for managing the funds and ensuring they are used to benefit the person with disabilities.
Special Needs Trusts (SNTs) are designed to help individuals with disabilities maintain their government benefits while still improving their quality of life. Here’s how they work:
| Key Concepts | Explanation |
|---|---|
| Funding the Trust | A parent, grandparent, or legal guardian typically establishes the SNT and funds it with assets or money specifically designated for the beneficiary. |
| Trustee Management | The trustee, often a trusted family member or professional, manages the trust’s funds and makes decisions on how they are used. |
| Preserving Benefits | By placing assets in the SNT, the individual with a disability can avoid disqualification from government programs like Medicaid and SSI, which have asset limits. |
| Quality-of-Life Expenses | The trustee can use the trust funds to cover a wide range of expenses, such as therapy, medical care, education, transportation, and recreational activities. |
| Ongoing Care | SNTs are designed to provide for the long-term needs of the beneficiary, ensuring their financial security and well-being. |
Special Needs Trusts offer a practical solution for parents and guardians to secure the financial future of their loved ones with disabilities while still allowing them to access crucial government benefits.
This post was originally published on Feb. 16, 2023. It was updated on Nov. 9, 2023.
