If you are the parent of a special needs child (including a minor or an adult with a mental or physical disability), you are probably concerned about what will happen when you can no longer act as your child’s parent and caretaker. A Cedar Rapids special needs planning attorney can help.
If you have a child in Iowa with special needs, consider establishing a special needs trust with an Iowa trust attorney’s guidance and advice. A special needs trust will ensure that your child is properly cared for after you pass away or if you should become incapacitated.
If you do not create a special needs trust, your child could lose his or her government benefits, spend all of the money you leave behind, or even be taken advantage of by others.
What, then, are the benefits of establishing a special needs (or “supplemental needs”) trust? How does a special needs trust work? Keep reading for the answers to these questions, and you will also learn where you can find a trustworthy attorney to set up a special needs trust for your child.
Why Should You Establish a Special Needs Trust?
A trust is a legal document that spells out how a third party (a trustee) will manage particular assets on behalf of another individual. The trustee you name for a special needs trust should be someone who is knowledgeable, trustworthy, and pays attention to details.
Federal law allows assets for a special needs child to be maintained in a special or supplemental trust without the child losing his or her eligibility for public benefits, so long as the special needs trust meets several specific legal requirements.
If you directly leave or give assets to a special needs child, you may inadvertently prevent that child from qualifying for public assistance. However, if you move the assets into a special needs trust, your child can receive the proper care while remaining eligible for public benefits.
If a disabled or special needs child relies on your support, let the right Cedar Rapids estate planning attorney help you prepare a special needs trust – that complies with all state and federal requirements – to care for your child after you pass away or should you become incapacitated.
Are Public Benefits Available to Your Special Needs Child?
In Iowa, many people with special needs or disabilities are eligible to receive public assistance. Your special needs child may qualify for programs that include the Supplemental Nutrition Assistance Program (SNAP), Supplemental Security Income (SSI), and/or Medicaid.
What do these programs offer? Medicaid covers a number of basic healthcare costs for those who qualify. Supplemental Security Income is paid to qualified adults who have little or no income or assets. The SNAP program assists individuals and families with grocery purchases.
If your special needs child is now eligible for SNAP, SSI, or Medicaid, an inheritance left directly to the child could change that eligibility. Special needs individuals qualify for SNAP, SSI, and Medicaid only when their incomes and financial resources are exceptionally limited.
How Do Special Needs Trusts Work?
A special needs trust can provide for your special needs child with no risk to your child’s qualifications for public assistance. Your child will not have any control over the trust funds, which will be owned by the trust and managed by the trustee you have designated.
You may designate yourself as trustee and manage the trust yourself while you’re alive, but you’ll also have to designate someone as a successor trustee to oversee the trust and manage the expenses of your special needs child after you pass away.
If your special needs child requires full-time, professional medical care, a Cedar Rapids special needs planning lawyer can set up a trust that minimizes your family’s out-of-pocket costs while maintaining your child’s access to public benefits and maximizing your family’s savings.
If your special needs child is still a minor, you also should designate a guardian in case the worst happens – you and/or the child’s other parent suddenly, unexpectedly pass away. If you haven’t named a guardian, a court can name one in that situation, but you should be making that choice.
What Else Is Important to Know About Trusts?
Every trust for a special needs individual is different. Here are the facts you should know and consider when you work with a Cedar Rapids special needs planning lawyer to establish a special needs trust:
- A trust for an individual with special needs must be a precisely worded document. You must express clearly that your trust has been established for your special needs child’s “supplemental and extra care” beyond what public assistance provides.
- A trust for a child with special needs cannot transfer cash directly to that individual. The trustee you designate will be in charge of the trust’s spending and will pay for the child’s healthcare providers, utilities, and housing – for example – directly.
- A trust for an individual with special needs is irrevocable, so you can’t cancel the trust or modify its terms without approval from the court. However, the funds in a special needs trust are not subject to liens, cannot be seized by creditors, and cannot be lost to lawsuits.
Is a “Pooled” Special Needs Trust the Right Option?
If you establish a pooled trust for your special needs child, instead of naming a person to act as your trustee, you name a non-profit that pools, invests, and manages trusts while maintaining individual accounts and having an account manager work with your special needs child.
Establishing a pooled trust ensures that the trust funds will be competently managed, that your child will receive the appropriate care, and that your child will retain eligibility for public benefits. Your first step is meeting with a Cedar Rapids special needs planning attorney.
What Will the Right Attorney Do on Your Behalf?
Your attorney should be an estate planning professional who will listen to your concerns about your child and his or her long-term needs. Your trust attorney will offer insights and guidance, but the final choices about a trust for your special needs child are yours and yours alone.
Together, you and your Iowa trust attorney will discuss your special needs child’s personal circumstances, identify your child’s specific needs, and develop a customized special needs trust that will meet your child’s needs and provide you with peace of mind about your child’s future.