How Can a Supplemental Needs Trust Be Used to Protect My Special-Needs Child?

Many families take care of a physically or mentally disabled child—and they worry about that child’s care once they are no longer able to be their guardian.

A supplemental needs trust is a way to protect the funds of an individual without jeopardizing government benefits.

There are two types of supplemental needs trusts:

• A first-party trust protects funds that belong directly to the individual, such as a personal injury settlement that the individual receives.
• A third-party trust protects the funds of the disabled individual received through a third party, such as an inheritance.

Government programs such as Medicaid or Social Security only provide so much. The function of the supplemental needs trust is to pay for any care, services or items the child may need outside of these programs, such as:

• A handicapped accessible van;
• A vacation; and/or
• Occupational or educational programs.

Supplemental needs trusts are not only for children; they are also for adults. A trust can be established during childhood for the life of the individual. For this reason, it’s ideal to appoint a fairly young trustee, and to name a backup trustee.

When appointing a trustee for a supplemental needs trust, it’s important to choose someone trustworthy.

I recommend parents create a Letter of Intent for the trustee, which spells out in detail the circumstances of the child. It might include the child’s normal daily routine, so the child can continue to live as normally as possible; any special care services the child may need; and the child’s likes, dislikes and preferences.

If a parent wants to name a bank as a co-trustee with an individual family member or friend, professional trust management services are available. Because a supplemental needs trust will need to be approved by the local Medicaid agency, it’s important to see an attorney before the trust is drafted.

If you have any questions or comments regarding how a supplemental needs trust can be used to protect your special needs child, please contact me.

Robert W. Shaw, Esq.
(914) 328-1222
E-mail Bob

Tags: Elder Law, Estate Planning, Robert Shaw, Special Needs