How a Special Needs Trust Protects Loved Ones

Home » Blog » How a Special Needs Trust Protects Loved Ones
Posted on: May 3, 2023 | by: Graber & Johnson Law Group, LLC
While it may not seem necessary when a special needs child is young, setting up a trust to ensure their financial stability is better to be done sooner rather than later.

A special needs trust, also called a Supplemental Needs Trust, is created for a person who is disabled and provides financial support. This is necessary because individuals who receive means-tested government benefits have assets and income limits set by government agencies, says a recent article, “The right special needs trust can help ensure a loved one’s financial stability” from Florida Today.

By setting up a special needs trust, these limits can be avoided, and a parent can ensure that their loved one has a better quality of life, during and after the parent’s own lifetime.

An estate planning attorney can help determine the best trust type in this situation. It’s also important to track how money from the trust is spent and follow legal guidelines.

A benefit of having an SNT is that it protects a special needs individual from financial abuse, since the trustee is the only person with access to the funds. For this reason, choosing a trustee who is responsible, financially savvy and of the highest integrity is very important.

The most commonly used trust is a Third-Party SNT. The distinction is that the trust is funded by someone other than the beneficiary, such as a parent or other family members. There are two types of third-party SNTs—a “standalone” trust and a “testamentary” trust. The standalone trust may be accessed during the funder’s lifetime. The testamentary trust is funded by an estate when the funder passes and is part of their will.

There is also a first-party trust funded by the beneficiary. This is helpful when the individual acquires a large sum of money. The money may be placed in the trust and used as it would be for any special needs trust. A key difference: a Medicaid Repayment Provision usually needs to be put into place as part of the trust, so Medicaid may be reimbursed when the beneficiary dies.

Lastly, the pooled trust is another commonly used special needs trust. It combines the trusts of more than one beneficiary and can be a first or third-party funded trust. It must be set up and run by a nonprofit organization, which can benefit a loved one of a person with special needs by the nonprofit handling the trust. The nonprofit acts as the trustee, administers the funds, makes investments, and ensures that tax obligations are met.

An estate planning attorney will provide you with the options for your unique situation. Parents are wise to put a comprehensive plan in place to protect their special needs family members for the future.

Reference: Florida Today (April 8, 2023) “The right special needs trust can help ensure a loved one’s financial stability”

Read Our Blog

Estate Planning Articles

Our daily blog discusses issues pertaining to Estate Planning, Probate Administration, Special Needs Planning, and Elder Law / Medicaid.
Read Our Blog

Join Our eNewsletter

Join Our eNewsletter

Each month we send an e-newsletter covering issues of Estate Planning. We also have subscriptions available for our bi-monthly Elder Law e-newsletter and weekly Business Planning e-newsletter.
Subscribe Now!

Request an Initial Consultation

Schedule a Time to Meet Our Team Today

Graber & Johnson Law Group, LLC is devoted to serving clients in the highly specialized areas of estate and business planning. Book a time to meet the Graber & Johnson Law Group Kansas Estate Planning Law Firm.
Request a Consultation

Have Questions?

If you have a a question, a comment, or simply want to have a conversation and explore how we can help, we’d love to hear from you.
Request a Consultation Now

Office Locations

Manhattan Office

1300 Fremont St
Manhattan, KS 66502

Directions

Hugoton Office

517 S. Main St.
Hugoton, KS 67951

Directions

Elkhart Office

701 Vilymaca St., PO Box 450
Elkhart, KS 67950

Directions

Hutchinson Office

1515 N. Lorraine St, Suite A,
Hutchinson, KS 67501

Directions

Garden City Office

1501 E Fulton St.
Suite 3
Garden City, KS 67846

Directions

Norton Kansas Office (Appointment Only)

201 E Holme St.
Norton KS 67654

Manhattan Office

1300 Fremont St
Manhattan, KS 66502

Get Directions
Hugoton Office

517 S. Main St.
Hugoton, KS 67951

Get Directions
Elkhart Office

701 Vilymaca St., PO Box 450
Elkhart, KS 67950

Get Directions
Hutchinson Office

1515 N. Lorraine St, Suite A,
Hutchinson, KS 67501

Get Directions
Garden City Office

1501 E Fulton St.
Suite 3
Garden City, KS 67846

Get Directions
Norton Kansas Office (Appointment Only)

201 E Holme St.
Norton KS 67654

Get Directions
Integrity Marketing Solutions - Estate Planning Marketing
Powered by
selectcrosschevron-down